Futures delivery

Futures contracts are designed to go to delivery. As we know, delivery can be either physical delivery of the underlying or by cash settlement. There can also be an Exchange For Physical (EFP) or Exchange For Swap (EFS) option on some futures. The physically delivered futures can be commodities or financial products like bond futures or some stock futures. The exchange decides what is deliverable, i.e. the type and grade of commodity or the bond. A list of deliverable grades or bonds is then...

Derivative products

'Derivatives' is the generic term used for a whole host of products that are traded either as listed products on an exchange or as bespoke, tailored products negotiated over-the-counter (directly between the counterparties). There are many thousands of derivative products yet most of them fall into categories that identify the underlying such as 'interest rate', 'commodity' or 'currency', or the specific instrument characteristic such as 'interest rate swap', 'cocoa futures', etc. This...

The process of delivery

The exact process involved in delivery varies from exchange to exchange and often from contract to contract. However, the process can be followed by looking at key stages that apply in general. The process used at Euronext.liffe for UK Gilt contracts is given as an illustration. Once a short position has been tendered for delivery, the holder advises the clearing organisation of the number of contracts, the asset to be delivered and if relevant, whether it is from the Proprietary (House) or...

Option exercise and assignment

The buyer of an option has purchased the right to either take delivery from call or make delivery to put the writer of the option. The underlying will be delivered unless the settlement is in cash format rather than physical. The terms under which the buyer may exercise their right are determined by the 'style' of the option. As previously noted there are four styles of options 1. American - exercisable on any business day 2. European - exercisable on expiry 3. Bermudan - exercisable at preset...

Euronextliffe Individual Equity Option Contracts

One option normally equals rights over 1000 shares January Cycle J means the 3 nearest expiry months from Jan, Apr, Jul, Oct cycle Minimum Price Movement Tick Size and Value February Cycle F means the 3 nearest expiry months from Feb, May, Aug, Nov cycle March Cycle M means the 3 nearest expiry months from Mar, Jun, Sep, Dec cycle Pence share 0.5 pence share 5.00 0.25 pence share 2.50 Exercise by 17 20 on any business day, extended to 18 00 for all series on a Last Trading Day Third Wednesday...