Explain the Settlement Process for a Physically-Settled Futures Contract ⎊ Path

Explain the Settlement Process for a Physically-Settled Futures Contract.

In a physically-settled futures contract, the actual underlying commodity or asset is delivered from the seller to the buyer on the contract's expiration date. This contrasts with cash-settled futures, where only the difference in cash value is exchanged.

Physical settlement requires the parties to manage the logistics of the asset transfer.

How Does a Cash-Settled Futures Contract Differ from a Physically-Settled One in This Context?

What Is the Difference between Cash-Settled and Physically-Settled Futures?

What Is the Difference between a Physically Settled and a Cash-Settled Futures Contract?

What Is ‘Cash-Settled’ Vs. ‘Physically-Settled’ Crypto Futures?

What Is the Role of the Settlement Price Index in Cash-Settled versus Physically-Settled Options?

Does the Settlement Process for Cash-Settled Options Differ from Physically-Settled Options at Expiration?

What Is the Key Difference between Cash-Settled and Physically-Settled Futures Contracts?

Explain the Difference between Physically-Settled and Cash-Settled Cryptocurrency Options

Glossar

Underlying Commodity

Asset ⎊ The underlying commodity, in the context of crypto derivatives, is the specific digital asset upon which the value of the derivative contract is based, such as Bitcoin or Ether.

Settlement Process

Clearing ⎊ This phase involves the final confirmation and reconciliation of all trade details between the buyer and seller, often managed by a central counterparty or a decentralized protocol.