Deferred Premium Option

deferred premium option

An option requiring payment of the premium at maturity rather than on the purchase date. The premium is paid whether or not the option is exercised. Also called Boston option.

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Deferred Premium Option

An option contract ? whether a call or a put ? in which the premium is not paid until the expiration date. A deferred premium option is a form of an American option; that is, the option may be exercised at any point until the expiration date. Generally speaking, deferred premium options are long-term investments; 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 payment option or a Boston option.