Delivery Option


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.

  1. Basis Grade

    The minimum accepted standard that a deliverable commodity must ...
  2. Minimum Price Contract

    A forward contract with a provision that guarantees a minimum ...
  3. Delivery Notice

    A notice written by the holder of the short position in a futures ...
  4. Certificated Stock

    The stock of a commodity that has been inspected by qualified ...
  5. Delivery Instrument

    A document given to the holder of a futures contact that may ...
  6. Approved Delivery Facility

    A facility authorized by an exchange to be used as a location ...
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  1. Do hedge funds invest in commodities?

    There are several hedge funds that invest in commodities. Many hedge funds have broad macroeconomic strategies and invest ... Read Full Answer >>
  2. Can mutual funds invest in options and futures?

    Mutual funds invest in not only stocks and fixed-income securities but also options and futures. There exists a separate ... Read Full Answer >>
  3. Can mutual funds invest in commodities?

    Mutual funds can invest in commodities. In fact, mutual funds may provide a better way for investors to gain exposure to ... Read Full Answer >>
  4. How do futures contracts roll over?

    Traders roll over futures contracts to switch from the front month contract that is close to expiration to another contract ... Read Full Answer >>
  5. Why do companies enter into futures contracts?

    Different types of companies may enter into futures contracts for different purposes. The most common reason is to hedge ... Read Full Answer >>
  6. What does a futures contract cost?

    The value of a futures contract is derived from the cash value of the underlying asset. While a futures contract may have ... Read Full Answer >>

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