How Do Smart Contracts Automate the Termination of a Derivative Contract?

Smart contracts automate termination by coding the specific exit conditions directly into the contract logic. For a futures contract, termination occurs automatically on the specified expiration date.

For an option, the contract terminates upon exercise or expiration. If a margin threshold is breached, the contract can automatically initiate a liquidation process, effectively terminating the original position.

This programmed self-execution removes the need for manual legal or administrative intervention.