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Settlement Options - Physical Delivery vs. Cash Settled
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Instead of relying on physical delivery to achieve convergence, futures contracts employ a device called cash settlement. In the cash settlement procedure, all long contracts that remain outstanding after the last day of trading are automatically offset by CME Group.

All contracts are thus canceled and, via the normal performance bond system, money moves from losing accounts to profiting accounts, based on the final one-day price change – hence the term cash settlement. It’s as if all the remaining contracts were simply offset by open outcry on the last day of trading, and all at the value of the appropriate index.

 

Video: Settlement Options

 

Video: Last Trading Day file

Legal Disclaimer and Risk Disclosure: Futures trading is not suitable for all investors, and involves the risk of loss. Futures are a leverages investment, and because only a percentage of a contract’s value is required to trade, it is possible to lose more than the amount of money deposited for a futures position. Therefore, traders should only use funds that they can afford to lose without affecting their lifestyles. And only a portion of those funds should be devoted to any one trade because they cannot expect to profit on every trade. All orders are entirely at your risk, and it will be your responsibility to monitor these orders. There are limitations to the protection given by stop loss orders therefore we give no assurance that limit or stop loss orders will be executed, even if the limit price is met, in full or at all.
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