Deliver Physical

From Open Risk Manual

Definition

Deliver Physical. Delivery means physically delivering the underlying asset on the agreed date. Term in an options or futures contract which requires the actual underlying asset to be delivered upon the specified delivery date, rather than being traded out with offsetting contracts.

If you sell a gold futures contract of say 1 kilogram then you will have to give real gold to the buyer on the mutually agreed date. Most derivatives are not actually exercised, but are traded out before their delivery date. However, physical delivery still occurs with some trades: it is most common with commodities, but can also occur with other financial instruments.

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This entry annotates a FIBO Ontology Class. FIBO is a trademark and the FIBO Ontology is copyright of the EDM Council, released under the MIT Open Source License. There is no guarantee that the content of this page will remain aligned with, or correctly interprets, the concepts covered by the FIBO ontology.

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