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Cost of Tender

What does Cost of Tender mean?

Total of many charges incurred when a specific commodity in an underlying futures contract is certified and delivered on a futures contract. This includes transportation, carrying costs certification fee and other physical delivery expenses besides commodity contract price.

Futures Knowledge Explains Cost of Tender

In a deliverable contract, the seller of the commodity needs to be paid the total cost of tender by the holder before the contract expires.  For example, if you buy a July 2015 futures contract to buy 1,000,000 barrels of crude. You will have to pay contract price of crude plus transportation, insurance, warehouse and other miscellaneous expenses. This is however not applicable if the futures contract holder closes his position before the expiry date.

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