Serial Option

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Futures Contract

    A contractual agreement, generally made on the trading floor ...
  2. Underlying

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

    A contract that allows the holder to buy or sell an underlying ...
  4. Delivery Month

    A key characteristic of a futures contract that designates when ...
  5. Nearby Month

    In the context of options and futures, the month closest to delivery ...
  6. Serial Bond

    A bond issue in which a portion of the outstanding bonds matures ...
Related Articles
  1. Options Basics Tutorial
    Options & Futures

    Options Basics Tutorial

  2. Options Trading Volume And Open Interest
    Options & Futures

    Options Trading Volume And Open Interest

  3. The 4 Advantages of Options
    Options & Futures

    The 4 Advantages of Options

  4. Stock Option Expiration Cycles
    Options & Futures

    Stock Option Expiration Cycles

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center