With the loss to Thiago Alves, Matt Hughes has one fight left on his current UFC contract. Here is a look at some of his options. Assuming that if he does fight again, his next match will be Matt Serra.
1. Retire now. He has lost his past two fights, and while both losses are to very good fighters, he is unlikely to get a fourth fight with GSP considering the way GSP was able to run through him in their last fight. He is one of the best champions in the history of the UFC, and it seems that he just doesn't seem to have what it takes to beat the top level fighters.
2. Fight Serra and then retire. This option makes the most sense to me because he and Serra have their feud from The Ultimate Fighter, and this would be a way to settle it and fulfill his contract to the UFC. This would be a fight that would probably do well in PPV buys, and Hughes could also get his wish of fighting on the same card as his brother (who is rumored to be close to a deal with the UFC). To help hype the fight, Hughes could announce win or lose that this would be his last fight, and then he can also focus on his gym and fight team.
3. Fight Serra and re-sign with the UFC. I think this will be the route that Matt will take because he has stated his desire to fight Serra and fight once or twice after that. This option, also, I think will allow him to try and gain another win or two, and if GSP loses, he could try and face the new champion for the welterweight title and then retire as the champion.
4. Fight Serra and then sign with another organization. I feel this is the least likely scenario. With all he as done for the UFC, I don't think Dana White would let him leave because if someone who has taken fights on short notice and always asked to fight the toughest person out there to help the organization left, it would make the UFC look bad. Also, I don't see him leaving the UFC after all the time he has spent there and his relationship with Dana White.