Cash-Settled Options

Cash-Settled Options
A type of option for which actual physical delivery of the security is not required, due to the high costs of transport, or simply when the purchaser does not wish to hold the physical evidence of an investment. Cash is sent in the amount of the difference between the option strike price and the current value of the security at the exercise date.

This type of option is most often exercised when delivery of the underlier is inconvenient or the cost of transport is a major consideration. For example, when purchasing company stock for individual ownership, delivery costs would be minimal. However, if purchasing an S&P Index option, the security will generally not be sent out as the costs of transport would be so high due to the large volume of transactions that would occur.


Investment dictionary. . 2012.

Игры ⚽ Нужно сделать НИР?

Look at other dictionaries:

  • Options Market France — (OMF) is a futures exchange and clearing house. In November 1987 Options Market France started publishing in association with the French bank CCF now HSBC France a stock index using the Reuters network under the symbol EFX 50. The index was… …   Wikipedia

  • Cash Settlement — A settlement method used in certain future and option contracts whereby, upon expiry or exercise, the seller of the financial instrument does not deliver the actual but transfers the associated cash position. For sellers not wishing to take… …   Investment dictionary

  • Exercise (options) — The owner of an option contract may exercise it, indicating that the financial transaction specified by the contract is to be enacted immediately between the two parties, and the contract itself is terminated. When exercising a call, the owner of …   Wikipedia

  • 1256 Contract — A 1256 Contract is a term used by the Internal Revenue Service to denote any regulated futures contracts, foreign currency contracts, non equity options, dealer equity options, cash settled options (including euro style index options), and dealer …   Wikipedia

  • United States Oil Fund — The United States Oil Fund (USO:AMEX) is an Exchange traded fund which invests in many products related to the petroleum sector.HistoryThe United States Oil Fund was founded in April 2006 by the Victoria Bay Asset Management along with the… …   Wikipedia

  • Futures contract — Financial markets Public market Exchange Securities Bond market Fixed income Corporate bond Government bond Municipal bond …   Wikipedia

  • Credit default swap — If the reference bond performs without default, the protection buyer pays quarterly payments to the seller until maturity …   Wikipedia

  • Credit derivative — In finance, a credit derivative is a securitized derivative whose value is derived from the credit risk on an underlying bond, loan or any other financial asset. In this way, the credit risk is on an entity other than the counterparties to the… …   Wikipedia

  • Binary option — In finance, a binary option is a type of option where the payoff is either some fixed amount of some asset or nothing at all. The two main types of binary options are the cash or nothing binary option and the asset or nothing binary option. The… …   Wikipedia

  • Eurex — is a major futures and options exchange for European benchmark derivatives featuring open and low cost electronic access globally. Its electronic trading and clearing platform offers a broad range of products and amongst other, operates the most… …   Wikipedia

Share the article and excerpts

Direct link
… Do a right-click on the link above
and select “Copy Link”