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Cash settlement
The closing of a position in a derivative by settling an amount based on the difference between the specified futures price or exercise price and the spot price of the underlying at the settlement date, as opposed to the physical settlement of the underlying.
(1) Derivatives that do not involve a deliverable asset, for example stock index futures or options, are designed to be settled in cash at maturity.
(2) The term cash settlement is also used in a more general sense to describe the cash settlement of any debt, as opposed to equity settlement or share settlement.
Translations
Synonyms and variations
- Equity settlement
- Share settlement