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A cash settlement is a settlement method used in certain futures and options contracts where, upon expiration or exercise, the seller of the financial instrument does not deliver the actual (physical) underlying asset but instead transfers the associated cash position.

Currency Options are contracts that grant the buyer of the option the right, but not the obligation, to buy or sell underlying currency at a specified exchange rate during a specified period of time. For this right, the buyer pays premium to the seller of the option.

There are two types of currency options the put option and the call option . A put option gives you the right but not the obligation to sell currency at a specific price on a certain date.

Currency futures are a exchange-traded futures contract that specify the price in one currency at which another currency can be bought or sold at a future date.Currency futures can be used to hedge other trades or currency risks, or to speculate on price movements in currencies.

Forex futures are exchange-traded currency derivative contracts obligating the buyer and seller to transact at a set price and predetermined time. Hedging, to reduce exposure to the risk created by currency fluctuations, and speculation, to potentially generate profits, are the two main uses for forex futures.

Currency futures are standardized contracts that trade on centralized exchanges. The futures are either cash-settled or physically delivered. Cash-settled futures are settled daily on a mark-to-market basis. As the daily price changes, the differences are settled in cash until the expiration date.

A. How can currency futures be used by corporations? ANSWER: U.S. corporations that desire to lock in a price at which they can sell a foreign currency would sell currency futures. U.S. corporations that desire to lock in a price at which they can purchase a foreign currency would purchase currency futures.