Fugit
- The time left with investor until the option exercise remains beneficial for the investor.
- Likelihood of the use of American style option before its expiry is termed as fugit.
A Berkeley expert named Mark German used binomial trees and created this concept by studying the optimal period to exercise an American option.
This option must not be used early unless it is deep in the money for the reason it may cause huge loss to the investor. Few traders feel that it is a profitable venture to use call options earlier to being in the money or prior to ex dividend date.