Physical Delivery


DEFINITION of 'Physical Delivery'

Term in an options or futures contract which requires the actual underlying asset to be delivered upon the specified delivery date, rather than being traded out with offsetting contracts.

BREAKING DOWN 'Physical Delivery'

Most derivatives are not actually exercised, but are traded out before their delivery date. However, physical delivery still occurs with some trades: it is most common with commodities, but can also occur with other financial instruments.

  1. Derivative

    A security with a price that is dependent upon or derived from ...
  2. Confusion Of Goods

    A legal term for when the goods or property of two or more parties ...
  3. Physical Option

    An option that is based on a physical asset. Physical options ...
  4. Commodity

    1. A basic good used in commerce that is interchangeable with ...
  5. Futures Contract

    A contractual agreement, generally made on the trading floor ...
  6. Underlying

    1. In derivatives, the security that must be delivered when a ...
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