Physical Delivery
Settlement method where the seller of a futures contract must deliver the actual underlying commodity to the buyer at expiration.
Physical delivery means the short side of a futures contract transfers the actual underlying commodity to the long side at expiration. Delivery specifications — grade, location, timing — are all spelled out in the contract.
CL (WTI crude oil) settles via physical delivery at Cushing, Oklahoma. GC (gold) settles via delivery of 100-oz bars at approved COMEX vaults. Most retail traders never want to reach physical delivery and must close or roll before the first notice day.
Understanding delivery is critical for commodity traders: holding CL into delivery means you are legally obligated to accept or deliver 1,000 barrels of crude.
Related Terms
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.
BeginnerCL (Crude Oil Futures)
NYMEX futures on West Texas Intermediate crude oil. 1,000 barrels per contract, $0.01/barrel tick, physically delivered at Cushing, Oklahoma.
IntermediateExpiration
The date on which a futures contract reaches the end of its life and is either cash-settled or triggers physical delivery.
BeginnerFirst Notice Day
The first date on which a futures contract seller can issue a delivery notice for physical settlement; long holders must exit before this date.
IntermediateGC (Gold Futures)
COMEX gold futures. 100 troy ounces per contract, $0.10/oz tick ($10/tick). Physically deliverable at approved COMEX vaults.
IntermediateGrade / Quality Spec
The standardized quality specifications a commodity must meet to be deliverable against a futures contract — API gravity and sulphur content for crude oil, purity for metals.
IntermediateLast Trading Day
The final session in which a futures contract can be traded before it expires and moves to settlement or delivery.
BeginnerTreasury Futures
CBOT futures on US government bonds — including 2-year, 5-year, 10-year notes and 30-year bonds — used to trade interest rate risk.
Intermediate