American-Style Options

Options that can be exercised any time during their lifetime. These are also known as open options. An Option is a contract that gives the right, but not an obligation, to buy or sell the underlying on or before a stated date and at a stated price. While buyer of option pays the premium and buys the right, writer/seller of option receives the premium with obligation to sell/ buy the underlying asset, if the buyer exercises his right. Assignment of options means the allocation of exercised options to one or more option sellers. The issue of assignment of options arises only in case of American options, because a buyer can exercise his options at any point of time.