Skip to main content

Why Might a Trader Prefer Cash Settlement over Physical Settlement?

A trader might prefer cash settlement to avoid the operational complexities and costs associated with managing the physical transfer and storage of the underlying cryptocurrency. Cash settlement is simpler, faster, and eliminates delivery risk.

It is also preferred if the trader's intent is purely speculative, not to acquire or dispose of the physical asset.

What Is the Primary Benefit of European-Style Options for the Exchange Clearing House?
Why Is Rule 506(C) Preferred over Rule 506(B) for Many Crypto Offerings?
In What Scenario Would a Trader Prefer an FOK Order over an IOC Order?
Why Might a Crypto ATM Operator Prefer Physically-Settled Contracts?