There are two delivery methods: cash delivery and commodity delivery:
1, cash delivery refers to the expiration date of the contract. The difference between the transaction price and the settlement price on the expiration date is calculated, and part of the gains and losses are settled to the counterpart respectively, and the physical delivery of goods is not involved during the period.
2. Commodity delivery refers to the expiration date of the contract, when the seller delivers the corresponding commodities to the warehouse designated by the exchange according to the quality and quantity, and the buyer delivers the corresponding payment to the exchange to execute the futures contract.
Futures contracts have an expiration date, and usually the exchange will require the last trading day of a contract. Assuming that after the last trading day, investors still have open trading positions, they must make delivery. If it's cash delivery, it's easier. Both long and short sides hedge their positions according to the specific price of the exchange, and the process caused by this specific price has long been decided. If it is a commodity delivery, the procedure is a bit complicated because it involves commodities. In futures trading, the method of commodity delivery is usually chosen.
China's product futures trading all adopts the way of physical delivery. Commodity delivery methods include centralized delivery and rolling delivery.
1. Centralized delivery: it means that neither party can explicitly apply for delivery before the last trading day when the contract expires. Delivery method, according to the matching results to complete the delivery. In centralized delivery, both parties have only one delivery opportunity in the delivery month.
2. Rolling delivery: refers to the unilateral selling of positions by investors based on the standard warehouse receipt and the delivery month after both parties enter the delivery. The commodity exchange shall, according to the delivery application made by the members voluntarily and clearly, organize the delivery slip to complete the delivery within the specified time. This is a rolling delivery method in the futures trading of Chicago Board of Trade (CBOT).