Cash Settlement
A settlement method used in certain future and option contracts whereby, upon expiry or exercise, the seller of the financial instrument does not deliver the actual but transfers the associated cash position. Investopedia Says:
For sellers not wishing to take actual possession of the underlying cash commodity, cash settlement is a more convenient method of transacting futures and options contracts. For example, the purchaser of a cotton future that is cash settled, rather than being required to take ownership of physical bundles of cotton, pays the difference between the spot price of cotton and the futures price. Related Terms:
Approved Delivery Facility
Basis
Basis Grade
Basis Quote
Carrying Charge
Carrying Charge Market
Cash Commodity
Cash Delivery
Cash Market
Cost Of Tender
Current Delivery
Full Charge
Futures Contract |