Settlement price
Definition · Level 7 · Futures & commodities
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The official end-of-day price of a futures contract, set by the exchange. Each day’s gains and losses are paid against it.
Example
ES settles at 5,960 after 6,000 yesterday: a long loses 40 × $50 = $2,000 per contract.
Where Tradecraft teaches it
Level 7 · Futures & commodities, in the lesson “Margin & marking to market”: A good-faith deposit, daily cash payment of gains and losses, and the move that triggers a margin call.
Related terms
- Futures maintenance marginThe lower equity floor for an open futures position, set in dollars per contract.
- Initial marginThe performance-bond deposit needed to open a futures position; the exchange’s clearinghouse sets the minimum and brokers can ask for more.
- Variation marginThe daily cash settlement of futures gains and losses: after each session the clearinghouse revalues positions at the settlement price, crediting…
- BackwardationCurve shape where later-dated futures trade below nearer ones.
- BasisThe gap between the spot (cash) price and a futures price, usually spot − futures.
- Cash-and-carryA near risk-free trade (arbitrage) when a future trades above fair value: buy the asset, finance (and store) it, sell the future, and hold both to…