Delivery Flashcards
Delivery Price
Usually the MOST RECENT SETTLEMENT PRICE not the original futures price.
Because of the DAILY SETTLEMENT of futures contracts, the price change of the futures price is already taken into account.
Timing of Delivery
Can be made during DELIVERY MONTH (FIRST NOTICE DAY - LAST NOTICE DAY)
If the short position wants to deliver a NOTICE OF INTENTION TO DELIVER is issued by the broker to the exchange.
This notice is passed by the exchange to the holder of the oldest outstanding long position.
Place of Delivery
Often specified by the exchange.
If alternative locations are specified it is normally the seller to choose the delivery place.
Delivery?
Most future contracts do not lead to delivery because future positions are normally closed (entering into an opposite trade to the original one) before the delivery period.
