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. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  2. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  3. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  4. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  5. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
  6. Earnings Multiplier

    An adjustment made to a company's P/E ratio that takes into account current interest rates. The earnings multiplier is used ...
Trading Center