The customary delivery procedure at the expiration of a commodity futures contract is:
A)Delivering the commodity to the futures buyer
B)Delivering the commodity to the futures exchange
C)Offsetting the initial futures position and settling in cash
D)Adding the profit or loss to your margin account and continuing to trade

Question

Quizplus · Accepted Answer

The customary delivery procedure at the expiration of a commodity futures contract is to offset the initial futures position and settle in cash. This means that the buyer and seller do not physically exchange the commodity, but rather settle their contract in cash based on the price at expiration. This is the most common method of fulfilling futures contracts as it is easier and more efficient than physical delivery.

The Customary Delivery Procedure at the Expiration of a Commodity