Serial Option


DEFINITION of 'Serial Option'

A short-term option on a futures contract in which the underlying expires in a forward month. In a serial option, the option expires before the underlying comes to maturity. Exercising the option places the holder in a position of the nearby month futures contract. Usually, the underlying futures will expire in the following month.

BREAKING DOWN 'Serial Option'

Serial options are created for months without an expiring futures contract. For example, if there is no gold futures contract in March, a trader might be able to purchase a March serial option. Assuming there is an April futures contract, exercising the March option will put the trader in a long position for the April contract.

  1. Delivery Month

    A key characteristic of a futures contract that designates when ...
  2. Futures Contract

    A contractual agreement, generally made on the trading floor ...
  3. Nearby Month

    In the context of options and futures, the month closest to delivery ...
  4. Underlying

    1. In derivatives, the security that must be delivered when a ...
  5. Options Contract

    A contract that allows the holder to buy or sell an underlying ...
  6. Serial Bond

    A bond issue in which a portion of the outstanding bonds matures ...
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