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.

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RELATED FAQS
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    Holding an option through the expiration date without selling does not automatically guarantee you profits, but it might ... Read Answer >>
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    The quick answer is yes and no. It all depends on where the option is traded. An option contract is an agreement between ... Read Answer >>
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