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Strategies & Market Trends : MDA - Market Direction Analysis

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To: Casaubon who wrote (72625)	3/18/2001 8:37:41 PM
From: RockyBalboa	Read Replies (1) of 99985

When a euro style option is written it can not be bought back until the last day of the contract life. Not correct. You can not exercise the european style option before the end of the option period (usually). In theory, this does not change the value of an option at all (with the exception of american puts for discrete dividend paying underlying). If it is a traded option (and I mean regularly traded on an exchange with MMs making quotes), then you can trade it every day regardless whether european, asian or american style. If it is an OTC contract (one tailor-made between 2 clients), then it negotiable to make a close-out before expiration (though rare). A minimum holding period is not a good idea. It simply increases the number of outstanding contracts (and it reduces turnover if margin requirements are higher for offsetting contracts than the net position).

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