What is Delivery Price?
Delivery price is the price at which the underlying commodity of a futures contract settles upon expiration of the contract.
How Does Delivery Price Work?
Upon the expiration of a futures contract, the underlying commodity is delivered to the holder in return for a predetermined price -- the delivery price. Delivery price is set by the clearinghouse at which the futures contract settles.
For example, if a soybean futures contract settles at a given clearinghouse, and the clearinghouse sets a price of $100 for the associated quantity of soybeans, $100 is the delivery price.
Why Does Delivery Price Matter?
Delivery price is locked in by the clearinghouse upon contract settlement in order to avoid exposure in the spot market for the underlying commodity.
