Forward start option

In this article, we will explore and analyze the impact of Forward start option in various contexts and situations. Forward start option is a topic of great relevance and interest to many people today, since its influence covers areas as diverse as daily life, culture, history, science, technology, politics and much more. From its emergence to its evolution today, Forward start option has left a deep mark on the world, generating debates, reflections and significant changes in different areas. Throughout this article, we will closely examine the different aspects that make Forward start option a fascinating and important topic, as well as its implications in the contemporary world.

This article has multiple issues. Please help improve it or discuss these issues on the talk page. (Learn how and when to remove these messages)

This article provides insufficient context for those unfamiliar with the subject. Please help improve the article by providing more context for the reader. (February 2013) (Learn how and when to remove this message)

This article relies largely or entirely on a single source. Relevant discussion may be found on the talk page. Please help improve this article by introducing citations to additional sources.
Find sources: "Forward start option" – news · newspapers · books · scholar · JSTOR (June 2010)

This article may be confusing or unclear to readers. Please help clarify the article. There might be a discussion about this on the talk page. (June 2010) (Learn how and when to remove this message)

(Learn how and when to remove this message)

In finance, a forward start option is an option that starts at a specified future date with an expiration date set further in the future.^[1]

A forward start option starts at a specified date in the future; however, the premium is paid in advance, and the time of expiration is established at the time the forward start option is purchased.^[2]

Pricing of Asset

Since the asset price at the start of this option is not known a priori, it is common to specify that the strike price will be set in the future, so that the option is initially at the money or a certain percentage in the money or out of the money.

This contract can be used to give an investor exposure to forward volatility.

Example of Forward Start Option

Executive stock options can be viewed as a type of forward start option. This is because a company commits to granting at-the-money options to employees in the future.^[3]