Physical Delivery

Physical Delivery

Term in an options or futures contract which requires the actual underlying asset to be delivered upon the specified delivery date, rather than being traded out with offsetting contracts.

Notes:

Most derivatives are not actually exercised, but are traded out before their delivery date. However, physical delivery still occurs with some trades: it is most common with commodities, but can also occur with other financial instruments.

See also: Call, Commodity, Delivery Date, Delivery Notice, Derivatives, Futures Contract, Offset, Options Contract, Underlying