Can an Option Contract Be Physically Settled, and If So, How? ⎊ Path

Can an Option Contract Be Physically Settled, and If So, How?

Yes, an option contract can be physically settled. For a call option, the buyer receives the underlying asset from the seller, and the buyer pays the strike price.

For a put option, the buyer delivers the underlying asset to the seller and receives the strike price. This requires the contract to explicitly state "physical settlement" as the delivery method.

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