Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Delivery Price

What it is:

Delivery price is the price at which the underlying commodity of a futures contract settles upon expiration of the contract.

How it works (Example):

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 it Matters:

Delivery price is locked in by the clearinghouse upon contract settlement in order to avoid exposure in the spot market for the underlying commodity.