DEFINITION of 'Delivery Option'

A feature added to some futures contracts permitting the short position to determine the combination of timing, location, quantity, and quality of the underlying commodity stated in the delivery notice.

BREAKING DOWN 'Delivery Option'

A delivery option provides a great deal of flexibility for the deliverer of the underlying commodity, but it poses a risk for the investors expecting delivery of the underlying.

RELATED TERMS
  1. Current Delivery

    A type of futures contract that requires the delivery of the ...
  2. Delivery Price

    The financial value of the conveyance of the underlying commodities ...
  3. Delivery Point

    In futures contracts, the delivery point is the place where the ...
  4. Approved Delivery Facility

    A facility authorized by an exchange to be used as a location ...
  5. In Sight

    A term describing deliverable grades of commodities underlying ...
  6. Delivery Notice

    A notice written by the holder of the short position in a futures ...
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RELATED FAQS
  1. 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 >>
  2. 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 >>
  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 are commodity spot prices different than futures prices?

    Find out more about commodity spot and futures prices, how to calculate a commodity's futures price, and the differences ... Read Answer >>
  6. How do commodity spot prices indicate future price movements?

    Find out more about commodity spot and futures prices, how to calculate commodity futures prices and how spot prices indicate ... Read Answer >>
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