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> If you get into the market for physically settled contracts with no intention of taking delivery, then you're almost certainly a speculator. Hard disagree. T
by centimeter 6y ago
> If you get into the market for physically settled contracts with no intention of taking delivery, then you're almost certainly a speculator.
Hard disagree. There are lots of reasons people with legitimate hedging concerns who don't intend to take physical delivery prefer the physical contract to a CSC (if it's even available).
- AnimalMuppet 6y agoWould you list some of those reasons, instead of just making the bare assertion?
- deleted 6y ago[deleted]
- centimeter 6y ago* Higher liquidity, lower slippage * Different regulatory capital requirements * Some commodities don't have cash settlement * Sometimes a CSC doesn't count (as much) from a regulatory/insurance perspective if you're hedging a position in a commodities basket or whatever I'm sure there are more - I don't work in commodities.
- TuringNYC 6y agoThese futures contracts are for delivery at a specific location. What if you just dont want a million barrels 2000 miles away? Cash settled seems a lot more flexible for lots of industrial use.