Learn more about important trading and financial terms here. Need more help? Our team is ready.
Physical settlement (in F&O) means that an eligible derivative contract is settled through the “actual delivery” or receipt of the underlying security, rather than settling only the difference in cash.
| Basis | Physical Settlement | Cash Settlement |
| Settlement Method | Underlying securities are delivered or received | Only the monetary difference is settled |
| Delivery Requirement | Applicable positions can result in delivery obligations | No delivery of the underlying |
| Funds/ Securities | Adequate funds or securities may be required | Cash settlement amount is required |
| Example | Applicable stock derivative settled through shares | Index derivative settled through cash |
| Main Consideration | Delivery obligation at expiry | Final settlement value |
Note: The exact settlement treatment depends on the type of derivative and exchange rules. Traders should also check the applicable contract specifications before holding positions until expiry.
Trade246 gives you access to the NFO (Nifty Futures and Options) market segment alongside NSE equities, US Stocks, Indices, Forex, Commodities, and Crypto.
Register today and trade at lifetime 0* brokerage. Also, avail of a high leverage of up to 500X margin. Our platform supports “ultra-low latency” order execution and maintains a 99.9% uptime. We also offer a free demo account to let you familiarise yourself with the platform and market conditions.
Open a free Trade246 account and get access to NSE, F&O, Forex, Commodities, Crypto, US Stocks & Indices — all from a single platform.