Deferred Month

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.

BREAKING DOWN '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.

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RELATED FAQS
  1. What are some examples of deferred revenue becoming earned revenue?

    Understand specific examples when a company's deferred revenue is converted to earned revenue, and learn the principles behind ... Read Answer >>
  2. What types of companies tend to have the most deferred revenue?

    Learn what types of companies tend to have the highest levels of deferred revenue. Understand when deferred revenue is recognized ... Read Answer >>
  3. How does a company derecognize a deferred tax liability?

    Learn about how deferred tax liabilities arise, when they must be reported in the financial statements, and how a company ... Read Answer >>
  4. How is a deferred tax asset taxed?

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  5. What's the difference between a grace period and a deferment?

    Learn the difference between grace periods and deferments and when each type of delayed-payment period applies to various ... Read Answer >>
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