What Is the Primary Difference between Cash-Settettled and Physically-Settled Futures Contracts? ⎊ Path

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

The key difference lies in the settlement at expiration. A physically-settled contract requires the seller to deliver the underlying asset to the buyer, and the buyer must pay for and take delivery.

A cash-settled contract, however, settles the difference between the contract price and the market price in cash. No physical exchange of the underlying asset occurs, making it simpler for financial instruments like indices or non-storable commodities.

What Are the Key Differences in Settlement Price Calculation between Physically-Settled and Cash-Settled Futures?

How Does Payment versus Payment (PVP) Differ from Delivery versus Payment (DVP)?

Does Cash Settlement Eliminate Counterparty Risk in Futures Trading?

How Is the Final Settlement Price Determined for a Cash-Settled Contract?

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

What Is the Role of the Settlement Price Index in Cash-Settled versus Physically-Settled Options?

How Does the Settlement Process Differ between Cash-Settled and Physically-Settled Futures?

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

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.