Cash settlement

Cash settlement is equivalent to a final margin call on the maturity date. It is a method used for some futures and options where the seller transfers the associated cash position instead of the underlying physical asset. When the contract expires or is exercised, the buyer gets a payment depending on the type of contract:

• Call options: the difference between the closing settlement price and the call option strike price.
• Put options: the difference between the put option strike price and the closing settlement price.