 Welcome. In this video I want to review the difference between European and American style options. With European style options a few examples are the S&P 500 index, the Russell 2000 index, and the NASDAQ. These are the three most liquid that we trade at navigation trading. On the American style side you still have SPY and IWM for example which are ETFs that track those indices however they are not the specific index they just simply track them. And so all stocks and ETFs SPY, IWM, Apple, Facebook, etc. these are all American style options. With the European style options you cannot buy or sell shares these are simply the indexes. You can trade options on the index but you can't buy and sell the actual shares. With stocks and ETFs you can actually buy and sell the shares and trade them as a normal stock. European style options settle to cash. So when they expire if you're holding options in those positions they simply settle to cash whereas the American style options settle to that actual stock that you own. The settlement price equals the opening price of the index components not the opening price of the index and I'll get into this in a later video. The settlement price of the American style options simply settles to the last closing trade price on expiration day. The last trading day for European style options is the third Thursday of the month whereas the last trading day for the American style options is the third Friday of the month. With European style the expiration day is the third Friday of the month and with American style it's also the third Friday of the month. The difference is that is the last trading day so the third Thursday of the month is the last day you can trade the European style options whereas with the American style you can trade them all the way through the close on Friday of the third Friday of that month. With European style options you can only exercise those on expiration day and with the American style you can exercise those any day and then in regards to taxes we are not a tax advisor make sure you consult your tax advisor when it comes to taxes but in general the tax treatment for European style options is a little bit more favorable because 60% of the gains can be counted as long-term capital gains which would be the 15% rate whereas the tax treatment on American style options is 100% short-term capital gains so that's whatever your ordinary income tax rate is. So I hope this was helpful in helping you understand the difference between European and American style options. If you'd like to learn more about the different strategies that we use to make consistent returns come see us at navigationtrading.com we've got a ton of free resources including the navigation watch list which is a list of the most profitable symbols to trade for each type of strategy. We've got the volatility indicator which you've seen on my charts you can download this directly to your Thinkorswim trading platform and we've got a free options course called trading options for income which is a step-by-step guide to get you making consistent trades right away. We look forward to seeing you there.