What Is a "Delivery Option" in a Futures Contract? ⎊ Path

What Is a “Delivery Option” in a Futures Contract?

A delivery option refers to the flexibility built into some physically settled futures contracts that allows the short (seller) to choose certain aspects of the delivery, such as the exact delivery date within a window, the grade of the commodity, or the delivery location from a list of acceptable alternatives. This flexibility is primarily for the benefit of the seller and can affect the final price of the futures contract.

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Glossar

Delivery Option

Contract ⎊ A delivery option grants the holder the right, but not the obligation, to buy or sell the underlying asset at a specified strike price upon exercise.