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NISM Certifications · NISM-Series-VIII: Equity Derivatives · Introduction to Options

Which statement about European and American style options is correct in the Indian exchange-traded equity derivatives market?

In India, both index options and stock options traded on exchanges are European style, meaning they can be exercised only on the expiry date. The older American style, which allows exercise any time before expiry, is no longer used for these contracts.

  1. AIndex options and stock options are both European styleCorrect
  2. BIndex options are American style and stock options are European style
  3. CIndex options are European style and stock options are American style
  4. DBoth index options and stock options are American style

Explanation

On Indian exchanges, index options are European style and stock options are also European style, exercisable only on expiry. Earlier stock options were American style, but they have been European style for years now. Hence the answer is that both are European.

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