Rather than accept delivery, most traders in futures markets choose
A) to make margin payments.
B) settlement by offset.
C) to mark-to-market.
D) to make arbitrage payments.

Question

Quizplus · Accepted Answer

Settlement by offset is the most common choice for traders in futures markets. This is because it allows the trader to close out their position without taking physical delivery of the underlying asset. Instead, they will settle the contract by offsetting it with an equal and opposite position in the market, effectively canceling out the original trade. This is a more practical option for traders who are primarily interested in speculating on price movements rather than physically dealing with the underlying asset. Margin payments and mark-to-market are important components of futures trading, but they are not alternative choices for delivery. Arbitrage payments are not relevant in this context.

Rather Than Accept Delivery, Most Traders in Futures Markets Choose