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. Current Delivery

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

    The delivery price is the price at which one party agrees to ...
  3. Delivery

    The action by which an underlying commodity, security, cash value, ...
  4. Delivery Month

    A key characteristic of a futures contract that designates when ...
  5. Actuals

    The physical commodity that underlies a futures contract or is ...
  6. Last Trading Day

    The last trading day is the final day that a futures contract ...
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