Give an Example of a Common Physically-Settled Derivative in Traditional Finance ▴ Learn

Give an Example of a Common Physically-Settled Derivative in Traditional Finance.

A very common example is a Crude Oil futures contract, such as the WTI (West Texas Intermediate) contract traded on the NYMEX. At expiration, the seller of the contract is obligated to deliver a specified quantity of crude oil to the buyer at a designated delivery point, usually Cushing, Oklahoma.

Similarly, many agricultural futures contracts, like Corn or Wheat, also mandate physical delivery. This mechanism is crucial for the physical commodity markets to align supply and demand.

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

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

Explain the Difference between Physically-Settled and Cash-Settled Futures Contracts

Give an Example of a Commodity Futures Contract That Is Primarily Cash-Settled