Cash settlement

Cash Settlementhttp://www.bizterms.net/term/Cash-settlement-contracts.html is a page devoted to providing you with all the information you will need about settling for cash. The term cash settlementhttp://www.wisegeek.com/what-is-cash-settlement.htm is predominantly a finance term used where futures and options are settled for cash as opposed to either financial instruments (e.g. stock index/interest rates) or physical commodities. The term is also widely used in the insurance market where a claim (especially personal injury) is settled for cash as opposed to pursuing a court case. The term also has a number of other uses which are explained later on this page.

The definition of Cash Settlementhttp://financial-dictionary.thefreedictionary.com/Cash+settlement is: Investopedia - A settlement method used in certain future and option contracts whereby, upon expiry or exercise, the seller of the financial instrument does not deliver the actual but transfers the associated cash position.http://www.investopedia.com/terms/c/cashsettlement.asp There are also four types of part cash settlement for futures contractshttp://www.faqs.org/abstracts/Business-general/Cash-Settlement-of-Futures-Contracts-An-Economic-Analysis-Covered-arbitrage-in-foreign-exchange-mark.html: 1. Offsethttp://www.investopedia.com/terms/o/offset.asp 2. Trade for physicalshttp://www.investopedia.com/articles/optioninvestor/06/goldsilverfutures.asp?viewed=1 3. Unequal physicals with cash 4. Cash settlement with a cornerhttp://www.puntercalls.com/glossary/glossary_c.htm

The Dictionary from Reference.com - For sellers not wishing to take actual possession of the underlying cash commodity, cash settlement is a more convenient method of transacting futures and options contracts. For example, the purchaser of a cotton future that is cash settled, rather than being required to take ownership of physical bundles of cotton, pays the difference between the spot price of cotton and the futures price.

Other possible meanings of cash settlement:

1. Settlement of a legal case for cashhttp://www.engadget.com/2006/08/23/apple-and-creative-settle-apple-forks-out-100m/ and out of courthttp://www.vandykelaw.ca/injury-settlements.htm
2. Settling of stocks/shares for cash, as opposed to the more typical on account approachhttp://financebroker.com/tag/cash-settlement/
3. The payment of a loan by a cash settlement
4. Sell an insurance policy, also called Life Settlement (e.g. life insurance for a cash settlement http://lifepoliciesofamerica.com/faqs.htm
5. Sell a structured settlement (long-term payment plan) for a one-off cash settlementhttp://www.doityourself.com/stry/ara_turnyourstructur

The content on this page is not a substitute for professional financial advice. Please consult a financial expert before taking any action suggested on this page.

In particular before you accept a cash settlement for a structured settlement ensure you get the best financial advice possible.