Option buyers get the right in the future. "Future" has two meanings. One is that you can choose to exercise or not exercise your rights at a future date (expiration date), and the other is that you can choose to exercise or not exercise your rights at any day before a future date (expiration date). The former option is called European option, and the latter option is called American option.

Europe and America are divided according to the time limit for the buyer to exercise options, regardless of the geographical location in the name. In fact, the United States also has European options, and Europe also has American options. From the actual distribution, in OTC options trading, European options are usually dominant, while in OTC options trading, many varieties appear in the form of American options.

At present, the options simulation trading launched by domestic exchanges, the stock options and ETF options of Shanghai Stock Exchange, and the stock index options of CICC are all European options, while the other three futures exchanges are all American options.

It is not difficult to imagine that American options seem to be more beneficial to option buyers than European options, because buyers can flexibly choose the time to exercise their rights according to changes in market conditions and their actual needs. For the seller, it seems to mean greater risk, because he must be ready to perform the contract at any time.