How Does Cash Settlement Affect the Final P&L Calculation? ⎊ Path

How Does Cash Settlement Affect the Final P&L Calculation?

Cash settlement simplifies the final Profit and Loss (P&L) calculation. The P&L is simply the difference between the contract's entry price and its final settlement price, multiplied by the contract size.

This difference is paid out in cash (usually a stablecoin or fiat), without the need to factor in the costs or logistics of asset delivery.

What Is the Difference between Realized and Unrealized P&L?

What Is the Impact of Partial Closure on the Average Entry Price of the Remaining Position?

What Is the Operational Benefit of Cash Settlement for Institutional Crypto Derivatives?

How Do the Settlement Procedures of Futures Contracts Affect Basis Trading Strategies?

Does the Initial Entry Price Factor into the Liquidation Price Calculation?

How Does the Settlement Method Affect the Final Price Convergence of the Futures Contract?

What Is the Difference between a ‘Delivery’ and a ‘Cash-Settled’ Futures Contract?

How Is the Liquidation Price of a Perpetual Contract Calculated When Using a Stablecoin as Collateral?

Glossar

Cash Settlement

Settlement ⎊ Cash settlement, within cryptocurrency derivatives and options trading, represents the fulfillment of a contract obligation through a monetary exchange rather than physical delivery of the underlying asset.

Index Price

Derivation ⎊ Index price construction for crypto derivatives requires selecting a representative basket of underlying assets and calculating a weighted average based on established market capitalization or volume metrics.