NISM Hyderabad : Settlement Prices Derivatives : AS Chakravarthy

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SETTLEMENT PRICES FOR DERIVATIVES

In the derivatives markets, the settlement price is the price used for evaluating profit or loss for the day, as well as margin requirements. The settlement price is the average price at which a contract trades, measured open and close of each trading day, and it is important because it regulates whether a trader is required to post additional margins defined as procedures that differ slightly depending on the exchange and the instrument traded.

SETTLEMENT PRICES FOR DERIVATIVES GIVEN IN THE FOLOWING TABLE

Product	Settlement	Schedule
Futures Contracts on Index or Global Index Individual Security	Daily Settlement	Closing price of the futures contracts on the trading day. (closing price for a futures contract shall be calculated on the basis of the last half an hour weighted average price of such contract)
Un-expired illiquid futures contracts (including Global Indices)	Daily Settlement	Price computed  theoretically as per formula F=S * ert
Futures Contracts on Index or Individual Securities	Final Settlement	Closing price of the relevant underlying index / security in the Capital Market segment of NSE, on the last trading day of the futures contracts.
Futures Contracts on Global Indices (S&P 500 and DJIA)	Final Settlement	Global Indices S&P 500 and DJIA on the last trading day of the futures contract is the Special Opening Quotation(SOQ)
Options Contracts on Index and Individual Securities	Final Exercise Settlement	Closing price of such underlying security (or index) on the last trading day of the options contract.
Options Contracts on Global Indices	Final Exercise Settlement	Global Indices S&P 500 and DJIA on the last trading day of the options contracts is the Special Opening Quotation(SOQ)

Special Opening Quotation

Special Opening Quotations of the indexes generally will be based on the opening values of the component stocks, regardless of when those stocks open on expiration day. However, if a stock does not open on that day, its last sale price will be used in the Special Opening Quotation. The Special Opening Quotation may or may not be within the cash index prices on expiration day.

CME disseminates periodic updates of the S&P 500 and S&P Mid Cap 400 Special Opening Quotations on the ticker as a text message. These quotations are based on the opening prices for those stocks that have opened by that time and the last sale price for those stocks that have yet to open.

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