Filter by Categories
Accounting
Banking

Derivatives




Deferred Payment American Option


A deferred payment option which permits the holder to freeze or lock-in the underlying price at which it will be exercised before maturity. And hence, the payoff (intrinsic value) of the exercised option will be only paid out at a scheduled expiration date.

Deferred payment American options are specifically much more of a put-style than a call-style. The cost of holding a put contract is almost identical to that of an otherwise identical European put, but for an additional benefit in terms of market timing possibilities associated naturally with American-style puts.



ABC
Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
Watch on Youtube
Remember to read our privacy policy before submission of your comments or any suggestions. Please keep comments relevant, respectful, and as much concise as possible. By commenting you are required to follow our community guidelines.

Comments


    Leave Your Comment

    Your email address will not be published.*