Explain why an American option is always worth at least as much as its intrinsic value.

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Fundamentals of Futures and Options Markets

ISBN: 978-0132993340

8th edition

Authors: John C. Hull

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Question Posted: Jan 20, 2016 08:52 AM

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Why is an American option worth at least as much as an otherwise similar European option? Is there an exercise strategy that one can use to turn an American option into a European option? Explain.
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Explain why an American option is always worth at least as much as its intrinsic value.

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The holder of an American option has the right to exe...View the full answer

Fundamentals of Futures and Options Markets

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