Cash Settlement

Settling a contract whereby a cash sum is paid or received instead of physically delivering the underlying instrument. In the case of an option contract, the cash settlement is determined by the difference between the option exercise price and the final settlement price of the underlying instrument. In the case of a financial futures contract, the cash settlement is calculated as the difference between the final settlement price and the daily settlement price of the contract on the previous exchange trading day.

Literatur:

Bloss, Michael; Ernst, Dietmar; Häcker, Joachim: Derivatives, 283 Seiten, 2008
[Dieser Titel bei Oldenbourg]