The term delivery denotes the practice of meeting the conditions of the options contract subsequent to notification of mission. While delivery may employ to options and forwards contracts, a posture is closed out ahead of this expiry date to prevent delivery.
When an investor moves in a options contract, then the last procedure of this deal may possibly involve delivery of the underlying asset. This could happen on the arrangement ‘s expiration date , in case of an American option, if telling of assignment has been received. By way of instance, the composer of a contact option (short option) is obligated to send stock in trade for cash from the ruler of this option. As the author of a put option is going to get stock in trade for money.
If owner doesn’t close out their standing before the contract’s expiry date, then they’ll soon be asked to deliver the underlying asset or pay their standing for money.