Does the Settlement Type Influence the Option Premium? ⎊ Path

Does the Settlement Type Influence the Option Premium?

Yes, the settlement type can influence the option premium. A physically settled option might have a slightly higher premium due to the embedded optionality of receiving the physical asset, which can be valuable during delivery squeezes.

However, the impact is generally less significant than factors like volatility and time to expiration.

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Glossar

Settlement Type Influence

Mechanism ⎊ Settlement Type Influence within cryptocurrency derivatives fundamentally alters risk transfer dynamics, impacting pricing models and counterparty exposure assessment.

Settlement Type

Delivery ⎊ Settlement Type defines the method by which a derivative contract is concluded upon its expiration or exercise, with physical delivery being one option.