Delivery Instrument

DEFINITION of 'Delivery Instrument'

A document given to the holder of a futures contact that may be exchanged for the underlying asset when the future contract expires. In simple terms, a delivery instrument is a receipt. Because many futures contracts involve produce and other items of bulk, delivery instruments are generally preferred to the actual asset.

BREAKING DOWN 'Delivery Instrument'

In addition to the problems associated with shipping bulk items, delivery instruments can also save money for the parties involved. This is because many futures contacts are sold before they expire. Of course, if the seller also possessed the underlying assets, he or she would need to make arrangements to ship them to the new buyer, costing the shipper money that could have been saved had the assets not been physically held in the first place.


Delivery instruments can include warehouse receipts, shipping certificates and vault receipts. These all are more transferable than physical commodities and provide investors with a more efficient method of settlement.

RELATED TERMS
  1. Delivery Price

    The financial value of the conveyance of the underlying commodities ...
  2. Current Delivery

    A type of futures contract that requires the delivery of the ...
  3. Physical Delivery

    Term in an options or futures contract which requires the actual ...
  4. Last Trading Day

    The final day that a futures contract may trade or be closed ...
  5. Approved Delivery Facility

    A facility authorized by an exchange to be used as a location ...
  6. Delivery Month

    A key characteristic of a futures contract that designates when ...
Related Articles
  1. ETFs & Mutual Funds

    Explaining Delivery Versus Payment

    Delivery versus payment is a common procedure for settling the exchange of securities.
  2. Markets

    Understanding Financial Instruments

    Financial instrument is a general term used to describe a monetary asset.
  3. Markets

    Crude Oil Prices: Comparing Future Price Vs. Current Market Price

    Discover the differences between oil futures market prices and oil spot market prices and what leads to the differences between the two.
  4. Investing

    What does DDP Mean?

    Delivery duty paid (DDP) is a shipping term specifying that the seller is responsible for all costs associated with delivery of the goods to the buyer. It is usually used when goods are exported ...
  5. Trading

    The Difference Between Forwards and Futures

    Both forward and futures contracts allow investors to buy or sell an asset at a specific time and price.
  6. Markets

    Major Companies That Lose Money On Shipping (AMZN)

    We look at some of the big companies in the home delivery business that have high shipping costs and how they mitigate this.
  7. Personal Finance

    The 3 Best Shipping Services to Use This Holiday Season (UPS, FDX)

    Look at the strengths, weaknesses and comparative costs of the three best shipping companies: the U.S. Postal Service, UPS and FedEx.
  8. Investing

    Options on Futures

    Options on futures contracts offer another way for day traders to use options. These are traded on the same exchange as the underlying futures contract. Traders should take care to understand ...
  9. ETFs & Mutual Funds

    Introduction To Currency Futures

    The forex market is not the only way for investors and traders to participate in foreign exchange.
  10. Investing

    What are Debt Instruments?

    A debt instrument is a documented financial obligation that enables the issuer to raise funds by borrowing money and repaying it in the future.
RELATED FAQS
  1. How do I learn technical skills for trading commodities?

    Learn what resources are available to learn about trading commodities, and understand some of the differences between stocks ... Read Answer >>
  2. What's the difference between cash-on-delivery differ and delivery against payment?

    Find out more about cash on delivery and delivery versus payment transactions and the difference between these two types ... Read Answer >>
  3. What does it mean to take delivery of a derivative contract?

    Find out more about derivative contracts and what it means when the holders of derivative contracts take delivery of the ... Read Answer >>
  4. Why do futures' prices converge upon spot prices during the delivery month?

    It's a fairly safe bet that as the delivery month of a futures contract approaches, the future's price will generally inch ... Read Answer >>
  5. How do futures contracts roll over?

    Learn about why futures contracts are often rolled over into forward month contracts prior to expiration, and understand ... Read Answer >>
  6. What is a wild-card play?

    A wild-card play is a term related to futures contracts. A future is a financial contract obligating a buyer to purchase, ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center