This widget compares the pricing of American and European options based on the Black-Scholes model and other factors.
American options can be exercised at any time before expiration, while European options can only be exercised at expiration. This difference affects their pricing.
The Black-Scholes formula for European call options is:
C = S * N(d1) - K * e^(-rT) * N(d2)
Where:
American options require more complex models like the Binomial Tree or Finite Difference methods due to their early exercise feature.