Save $588 per year with Sponsored Premium 

Cash settlement in options trading

This lesson assumes that you understand your financial goals and are familiar with all the risks and opportunities online trading provides. You can schedule a free call with our expert trader that will help you find the best way to achieve your financial goals.

Delivery of the underlying asset can not always be made. In such cases, a method of cash compensation can be used, also called a ‘cash settlement’. It is obvious that these options cannot belong to the American option type. Cash-settled options are always in European style.

Cash settlement

Stock op