An
option contract (whether a
call or a
put) in which the
premium is not
paid until the
expiration date. A deferred payment option is a form of an
American option; that is, the option may be
exercised at any point until the expiration date. Generally speaking, a deferred payment option is a long-term
investment; the expiration date (and hence the premium payment) is usually at least a year after the date the contract is first entered. It is also called a deferred premium option or a Boston option.