An American-style, non-standard option that has a perpetual life. In other words, it neither expires nor has an exercise limit. Since it has an infinite time to maturity, which means its value doesn’t depend on the passage of time (i.e., it is time-independent), this option can be exercised at any time. However, once exercised, the perpetual option dies out as any other option does. As such, the expiration risk is non-existent in this type of options, and therefore it is superior to a standard option (vanilla option).

The option would be exercised as soon as the underlying’s price reaches a specific level (called the optimal exercise point) where the option price and the payoff converge.

The perpetual option has other different names such as: expirationless option, non-expiring option, and XPO.