1492 terms

Glossary

Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.

Showing 2 terms

Physical settlement

Derivatives

Settlement of a derivative contract by delivery of the underlying shares against cash, rather than by paying the cash difference.

In plain terms

It takes every single-stock future open at expiry and every single-stock option that finishes in the money, while index contracts stay cash-settled — which is why the two behave so differently in the final week. A cheap option finishing marginally in the money becomes an obligation for the full strike price times lot size.

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Delivery margin

Derivatives

Additional margin collected in steps over the final four sessions of a series, on positions likely to result in physical settlement.

In plain terms

The mechanism behind the expiry-week calendar. Positions are unwound because holding them got expensive on a fixed schedule, not because anyone changed their mind about the company — which is why so many of those moves reverse in the new series.

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