How Does the 'Delivery Option' Benefit the Short Party in a Physically Settled Contract? ⎊ Path

How Does the ‘Delivery Option’ Benefit the Short Party in a Physically Settled Contract?

The 'delivery option' gives the short party (the seller) some flexibility in choosing the specific date, location, and sometimes the grade of the underlying asset to deliver within the terms of the contract. This flexibility, often referred to as a "short's option," allows the seller to choose the cheapest or most convenient delivery method, which can be a valuable financial advantage.

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