TYPES OF OPTIONS AND THEIR RELEVANCE

1. European options

These mature at the end of the contract period, and are good risk management tools. European options are allowed on the equity derivatives market

2. American options

Option holders can exercise American options any time during the contract period, which makes it difficult to manage risk

3. Bermudan options

These are mid-way solution between American and European options and can be exercised on pre-determined dates during the contract