Schweser mentioned that there is no difference in the value between the american and european options on the same non dividend paying stock. Why is this?
Isn’t the american option more valuable when the option is deep in the money so as to lock in the gains?
I think its because min value ofAmerican Call before expiry is S -X/(1+r)^t. That value is bigger than what you get if you exercise (S-X) therefore there’s no point exercising at any time. Better off selling in open market. That also means that there’s no value in the early exercise right of american option…which means should cost same as europenan option? That’s my interpretation.