What is a Variable Maturity Option?
Variable maturity options are options that involve a put or a call that mature before the expiration date. Generally, the put or call will mature well before the date of expiration when the underlying instrument undergoes a substantial change in price. This change in price can be a significant increase or decrease, resulting in the variable maturity option realizing a greater or smaller return for the investor. One of the features of the variable maturity option is that this strategy does present an opportunity to make a larger return on the investment. Unlike a standard option, the variable maturity option is influenced by market performance. When the underlying instrument associated with the option performs more favorably than anticipated, the returns will increase accordingly. With the opportunity to realize greater profits, the variable maturity option also carries a greater degree of risk. Because there is the chance that the underlying asset for the option may drop in value, it i
