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Finance a la shmoop what's the difference between an American and a

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European-style stock option okay if you clicked to [Man talking]

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watch this video we're gonna assume you know what an option is if not well then

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our video on it which won a Palme-d'Oy Vey-at con awaits alright well this [People chanting at Palme d'Oy Vey]

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video is about one thing only a date not brought to you by tinder.. American

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options can be converted anytime they are owned until they expire which in the

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US usually happens on the third Friday of each month

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aka expiration Friday that is the November 50 strike calls expire at the [Calendar flicks]

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end of the trading day on the third Friday of this coming November it's just

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easier having them all expire on the same day saves a lot of you know date

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writing and yeah we thought the same thing thank goodness they don't sell [Green eggs on a shelf]

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eggs that way ok so that's an American style option - A European style option is

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different in one key way other than you know all the socialism and centuries of

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espresso and wine and tea development behind it [People pouring tea, wine and espresso]

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European options can only be converted and expire on one day so if that day

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comes along in well North Korea decides to get all balmy or nuki and the market

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goes down a lot well then you're out of luck at least if you had call options [Stock market dropping]

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who were hoping to make money from because the market would go down right

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well the fact that it's only one day when you can sell is in large part a

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reflection of the very low tech manual labor systems in place when the whole [Person scribbling on piece of paper]

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call option world was put into place in Britain like a hundred years ago the

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American system was run largely by computers from a very early time in its [Person using computer]

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history ie it was much later than when the Brits started and you can imagine

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that if you leave open the potential for trading options at any time during a [Trade transferring between people]

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given period well it leaves massively more data entry and data management

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duties then if all the fireworks happen on one day so you really do need [Fireworks going off in the sky as window is open]

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computers to manage all that stuff and it of course leaves the market open to a

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whole lot more corruption manipulation and control from the

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you know powers-that-be so do they sell options on being Queen,

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King, Joker yeah when and how would they expire...[Man throws away King and Joker cards]

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