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Physical Delivery


The delivery of an asset such as a commodity or instrument, in physical form. This term is used specifically in the context of an options or futures contract whose underlying asset is to be actually delivered upon the pre-set delivery date against payment of the exercise price/ future price, rather than on a cash basis (cash settlement) where a contract is offset with other contracts (the net difference is paid in cash).

For an asset such as a warrant, it is the settlement of a warrant transaction through the delivery of the physical underlying asset (by the seller) against payment of the exercise price (by the buyer).



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