What Is the Primary Difference between a Physically-Settled and a Cash-Settled Futures Contract? ⎊ Path

What Is the Primary Difference between a Physically-Settled and a Cash-Settled Futures Contract?

A physically-settled futures contract requires the actual delivery of the underlying asset upon expiration. For example, a physically-settled Bitcoin contract would mean the transfer of actual BTC.

A cash-settled contract, however, is settled by paying or receiving the difference between the contract price and the spot price in cash. Cash-settled contracts are often preferred for indices or commodities where physical delivery is impractical.

What Is the Primary Difference between Physically-Settled and Cash-Settled Futures?

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What Is the Difference between Cash-Settled and Physically-Settled Futures?

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Glossar

Final Settlement Price

Valuation ⎊ The Final Settlement Price in cryptocurrency derivatives represents the agreed-upon value of the underlying asset at contract expiration, crucial for determining payouts in options and futures.