A settlement method where the difference between the contract price and market price is paid in cash rather than delivering the underlying asset.
Cash settlement means that on exercise, assignment, or expiry, the difference between the option’s strike price and the underlying’s settlement price is paid or received in cash, with no physical transfer of the underlying asset. Index options and index futures in India are cash-settled, which simplifies expiry for traders since there’s no need to arrange delivery or take on unwanted stock positions.
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