A way of exercising specific rights attached to an instrument/ security/ contract or any other set-up which can take place only at expiration date. For example, a European-style option (European option) gives the holder the right, but not the obligation, to buy (European call option) or sell (European put option) an underlying asset at an agreed-upon price on the expiration date of the contract, reflecting the prevailing market price of that asset at the time of expiration.

Other examples of European-style instruments/ securities include European-style bonds.

Similar to American-style options, the payoff of European-style options is a function of the average price of the underlying asset as on a particular date. Such option names (American, European, etc) don’t refer to a specific geographical area. Instead, they are just types of options that can be traded anywhere.