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Although physical delivery accounts for a small proportion in the whole futures contract, it is physical delivery and this potential that make the changes of futures prices synchronized with the changes of related spot prices, and gradually approach with the approach of contract expiration date. Physical delivery is essentially a spot transaction.
The physical delivery in futures trading is the continuation of futures trading, at the junction of futures market and spot market, and it is the bridge and link between futures market and spot market. Therefore, the physical delivery in futures trading is the basis of the existence of the futures market and the fundamental premise for the two major economic functions of the futures market to play. Some enterprises, especially production enterprises, can also effectively avoid the risk of rising raw material prices through physical delivery of futures.
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