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Cash Contract

What does Cash Contract mean?

A trade of a security or stock where the settlement of the trade happens on the same trading day.  The buyer and the seller are obliged to make the settlement on the same day. But it is not a common practice. A cash contract takes place either at the yearend for proper reflection in books or in a situation of urgency.

Futures Knowledge Explains Cash Contract

Unlike futures contract, cash contract is done always with the intention of actual physical delivery. Delivery of a particular amount of a specified commodity is to be done on a predetermined date against payment on the same day. The size of lot in cash contract needs not standardized as required in futures contract.

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