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Exchange of Futures for Cash

What does Exchange of Futures for Cash mean?

In the futures market, physical delivery of the underlying commodity, is required be done on a specified date. But ‘exchange of futures for cashpayment’ allows payment of cash rather than making physical delivery.  This is also called exchange for physicals or exchange against actuals.

Futures Knowledge Explains Exchange of Futures for Cash

Buyers and sellers may choose to avoid dealing with physical delivery of the underlying assets by offsetting their obligation at some point prior to expiration of the futures contract. Futures contracts are exchanged for cash contracts. The delivery of the physical commodity does not take place.

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