How Does "Delivery Risk" Apply to Physically-Settled Crypto Options? ⎊ Path

How Does “Delivery Risk” Apply to Physically-Settled Crypto Options?

Delivery risk refers to the potential problems associated with the actual transfer of the underlying cryptocurrency upon exercise. This can include technical issues with wallet transfers, delays in the blockchain network, or the risk of the seller not possessing the crypto to deliver.

It adds a layer of operational complexity not present in cash-settled options.

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Glossar

Delivery Risk

Settlement Failure ⎊ Delivery Risk in derivatives trading refers to the possibility that one counterparty fails to deliver the underlying asset as contractually obligated upon exercise or expiration, typically occurring in physically settled contracts.