Deferred Payment Option

DEFINITION of 'Deferred Payment Option'

An option with all the characteristics of an American vanilla option, with one exception: payment is deferred until the original expiration date.

BREAKING DOWN 'Deferred Payment Option'

The option can be exercised at any time; however, payment is deferred until the original expiration date of the option. These options are considered long term options, with expiration dates at least one year away.

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