What Is the Difference between MTM and the Final Settlement of a Contract? ▴ Learn

What Is the Difference between MTM and the Final Settlement of a Contract?

Mark-to-market is the daily process of adjusting the contract's value and transferring funds to cover gains or losses throughout its life. Final settlement is the one-time event at expiration or exercise where the contract is fully closed, either by physical delivery or a final cash payment based on the settlement price.

MTM occurs daily, while final settlement occurs once.

Does the Time Remaining until Expiration Make Early Exercise of an In-the-Money Put More or Less Likely?

Can a Trader Avoid Paying or Receiving the Funding Rate by Closing Their Position Just before the Payment Time?

What Is the ‘Settlement Price’ and How Is It Determined by the Clearing House?

Does the Exercise of a Physically-Settled Option Require MTM?