Are Index Futures Ever Physically-Settled? ⎊ Path

Are Index Futures Ever Physically-Settled?

No, index futures are virtually always cash-settled. An index, such as the S&P 500 or a Cryptocurrency Index, is a theoretical basket of assets, not a single physical asset that can be delivered.

Settlement is achieved by calculating the cash difference between the contract price and the final index value. Physical delivery of all underlying components of an index would be logistically impossible and financially inefficient.

What Is the Concept of a “Basket” of Stablecoins in a Multi-Asset Stableswap Pool?

Why Are Most Cryptocurrency Index Options Cash-Settled?

How Does the Convergence Process Differ between Physically-Delivered and Cash-Settled Futures?

How Does the Choice of Collateral (E.g. ETH Vs. a Basket of Tokens) Affect the Over-Collateralization Ratio?

What Are the Key Differences in Settlement Price Calculation between Physically-Settled and Cash-Settled Futures?

What Is the Risk Management Implication of Using a Basket of Stablecoins versus a Single One for Collateral?

What Is the Role of the “Delivery Month” in a Physically Settled Futures Contract?

What Is the Settlement Method for Options on the S&P 500 Index?

Glossar

Futures Contract

Leverage ⎊ Futures contracts in cryptocurrency represent agreements to buy or sell an underlying asset at a predetermined price on a future date, functioning as a derivative instrument that allows for amplified exposure without immediate asset ownership.

Index Futures

Derivation ⎊ Index futures, within cryptocurrency markets, represent agreements to buy or sell an underlying crypto index at a predetermined price on a future date, functioning as forward contracts standardized for exchange trading.