Why are most futures contracts not settled through delivery of the product?
A) Most contracts are settled through the margin account.
B) Most contracts expire with neither party having an obligation to the other party.
C) Most participants cancel their futures contracts through purchase of an option contract.
D)It is easier and cheaper to settle in cash or by offset.

Question

Quizplus · Accepted Answer

Settlement in cash or by offset is easier and cheaper than delivery of the physical product, which requires storage, transportation, and quality control. Therefore, most futures contracts are settled in this manner.

Why Are Most Futures Contracts Not Settled Through Delivery of the Product