Cash Settlement
A settlement method where no physical asset changes hands at expiration — the contract settles to a final index or reference price in cash.
Cash settlement is the dominant settlement method for financial futures. Rather than delivering the underlying (e.g. all 500 S&P constituents), the open position is simply marked to the final settlement price and the net gain or loss is credited or debited in cash.
For ES and NQ, the final settlement price is the Special Opening Quotation (SOQ) of the S&P 500 or Nasdaq-100 on the third Friday of the expiry month. Positions are squared at this price and then closed.
Cash-settled contracts eliminate delivery logistics but do not eliminate the risk of the final price differing from the prior day's close — which is why many traders roll well before expiry.
Related Terms
Basis (Futures)
The price difference between the spot (cash) price of an underlying and its corresponding futures price.
IntermediateDaily Settlement Price
The official closing price established by the exchange each session, used to calculate mark-to-market P&L and margin requirements.
IntermediateExpiration
The date on which a futures contract reaches the end of its life and is either cash-settled or triggers physical delivery.
BeginnerIndex Futures
Futures contracts whose underlying is a stock market index — settled in cash against the final index value at expiration.
BeginnerLast Trading Day
The final session in which a futures contract can be traded before it expires and moves to settlement or delivery.
BeginnerPhysical Delivery
Settlement method where the seller of a futures contract must deliver the actual underlying commodity to the buyer at expiration.
IntermediateQuadruple Witching
Like triple witching but adds the expiration of single-stock futures — the four simultaneous derivative expirations on quarterly expiry Fridays.
IntermediateRollover
Closing a near-expiry futures position and simultaneously reopening it in the next contract month to maintain exposure without taking delivery.
IntermediateSettlement Price
The official price used at expiration (or daily) to resolve all outstanding contracts — either cash-settled or as the delivery benchmark.
IntermediateTriple Witching
The quarterly expiration of stock index futures, stock index options, and individual stock options simultaneously on the third Friday of March, June, September, and December.
Intermediate