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Cash Settlement Contracts |
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Cash settlement contracts Futures contracts such as stock index futures that settle for cash and do not involve delivery of the underlying. Cash Settlement Contracts Futures or option contracts in which the counterparties agree that instead of delivering the underlying assets at the execution of the contract, one delivers their cash equivalent. For example, suppose someone bought a call contract taking on the obligation to buy a certain number of barrels of oil, should the option be exercised. If/when the option is exercised, the call holder pays the strike price. In exchange, the counterparty delivers the cash value of the agreed upon number of barrels of oil. Such a transaction is usually netted between the parties so that cash only changes hands once. Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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