Flashcards in LOS 59.E: DESCRIBE HOW A FUTURES CONTRACT CAN BE TERMINATED AT OR PRIOR TO EXPIRATION; Deck (1)
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1
Q
DESCRIBE HOW A FUTURES CONTRACT CAN BE
TERMINATED AT OR PRIOR TO EXPIRATION;
A
Exiting a Futures Position
• Execute an offsetting transaction.
If Long, short same contract
If Short, go long
• Deliver underlying asset at termination.
Delivery terms (quantity, quality, location, etc.) are standard in the
contract.
• Cash settlement at expiration.
• Exchange for Physicals.
Negotiate early delivery of underlying asset.