If an American-style option possesses time value on any day up to expiration date, the option holder would get more by selling it than exercising it.

Question

Quizplus · Accepted Answer

This is because if the option possesses time value, then there is still potential for its price to increase before expiration. Therefore, selling the option would allow the holder to realize the time value and potentially make more money than if they simply exercised the option.

If an American-Style Option Possesses Time Value on Any Day