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Deferred Premium Option
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An option without an upfront premium. At expiration, the premium is paid or netted against any option payoff. The only differences between a deferred premium option and a standard option are the timing and size of the premium payment. The premium for a deferred premium option will be higher than standard option premiums by at least the interest cost of carrying the premium. See Boston Option (2). Contrast with Contingent Premium Option (diagram). See also Installment Option (diagram), Pay Later Option (PLO).
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