An option that allows the holder to repeatedly exercise the right to receive greater or smaller amounts of the underlying. In the case of a call option, the holder can exercise for more favorable terms, i.e., higher payoff (higher underlying – strike). While, in the case of a put option, the more favorable terms also mean higher payoff (strike – lower underlying).

If the underlying is energy, the option is known as a swing option. A swing option gives the holder a fixed number of exercise opportunities to purchase electricity at a given price.