Deferred Month

AAA

DEFINITION of 'Deferred Month'

The latter month(s) of an option or futures contract. For example, when considering a three-month option at the time of purchase, months two and three could be thought of us deferred. In the second month of ownership, the third month could be considered deferred and so on.

INVESTOPEDIA EXPLAINS 'Deferred Month'

The number of deferred months is part of what gives an option its time value, which is the difference between an option's trading value and its intrinsic value. As the expiration date of an option nears, its time value diminishes.

RELATED TERMS
  1. Volatility Skew

    The difference in implied volatility (IV) between out-of-the-money, ...
  2. Option

    A financial derivative that represents a contract sold by one ...
  3. Time Decay

    The ratio of the change in an option's price to the decrease ...
  4. Time Value

    The portion of an option's premium that is attributable to the ...
  5. Delivery Month

    A key characteristic of a futures contract that designates when ...
  6. Triple Witching

    An event that occurs when the contracts for stock index futures, ...
Related Articles
  1. Understanding The Time Value Of Money
    Investing Basics

    Understanding The Time Value Of Money

  2. The Importance Of Time Value In Options ...
    Options & Futures

    The Importance Of Time Value In Options ...

  3. Are You Ready To Trade Futures?
    Options & Futures

    Are You Ready To Trade Futures?

  4. Options On Futures: A World Of Potential ...
    Options & Futures

    Options On Futures: A World Of Potential ...

comments powered by Disqus
Hot Definitions
  1. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  2. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Budget Deficit

    A status of financial health in which expenditures exceed revenue. The term "budget deficit" is most commonly used to refer ...
Trading Center