In options, “settlement” means fulfilling the contract at expiration — either by delivering the asset (physical settlement) or paying the price difference in cash (cash settlement).
👉 So, which type applies to the options you trade? The Options Handbook breaks it down clearly! (Join the events at the end to win rewards!) 🎁
▶ Cash Settlement 💵
Cash settlement applies to index options and volatility products (like VIX). No shares involved, your account is credited or debited based on the difference between the strike and final index value.
Example: Your $S&P 500(.SPX)$ index option expires with a $9,000 profit. That amount is added directly to your account.
▶ Physical Settlement 📦
Physical settlement is associated with stock options. You'll need cash to buy the shares if you exercise a call. If you exercise a put, you'll need to own (or borrow) the shares to sell them, or your broker might close the trade on your behalf.
▶ Bottom line 📌
Knowing how to exit a trade is just as important as knowing how to enter one. Whether you plan to close, exercise, or settle, each choice comes with timing, capital, and strategy considerations.
As you gain experience, this decision becomes less about guesswork and more about control.
🎉[Mini Events]🎉
How to Join
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Open The Options Handbook, find any section that mentions the word “settlement”.
Snap a photo and drop it in the comments with your own thoughts on exercising options! 📸
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Don’t have the handbook? No worries! Just share a recent exercise/assignment experience that left a strong impression on you.
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Example: “Cash settlement applies to index options and volatility products (like VIX).” (With your photo 📸)
Prizes
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🎁Participation Reward: 10 Tiger Coins for every valid comment.
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📓 Scholar Award: Participants who leave insightful comments will receive a free copy of The Options Handbook!
Event Period
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📅 Sep 5, 2025 → Sep 12, 2025
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Winners announced within 10 trading days after the event.
>> Redeem Options Handbook Now <<
>> Click here for the Simplified Chinese version <<
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