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What Is the Process of Physical Settlement versus Cash Settlement in Crypto Derivatives?

Physical settlement involves the exchange of the actual crypto asset; cash settlement involves only the net monetary difference.
Greeks.Live03.11.25

What Is the Process of Physical Settlement versus Cash Settlement in Crypto Derivatives?

Physical settlement means the actual underlying asset (e.g. Bitcoin) is exchanged upon expiration or exercise.

In a covered call, physical settlement means the seller delivers their BTC to the buyer. Cash settlement means only the monetary difference between the contract price and the market price is exchanged, usually in a stablecoin or fiat.

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