A figure determined by the closing range that is used to calculate gains and losses in futures market accounts. Settlement prices are used to determine gains, losses, margin calls, and invoice prices for deliveries. Related: Closing range.
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In futures, the average price at which a futures contract trades on a given day. It is calculated by taking the average of the opening price and the closing price on that day. The settlement price helps a broker determine whether a client's margin account needs to be called, if the price changes too much, and the client holds the contract in question.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
In futures trading, an official price established at the end of each trading day by using the range of closing prices for a particular contract. This price, similar to the closing price for stock, is used to determine margin requirements and the following day's price limits.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.