There are three types of settlements available for the commodities futures contract traded on the Multi Commodity Exchange. That is, assume that you have bought one lot (1 kg) of gold futures contract. All bullion and base metal contracts traded on the MCX come under the Compulsory settlement category. Say, you have bought one lot (100 barrels) of crude oil futures contract at ₹3,500 per barrel. The third settlement type, “Both Option” gives the buyer/seller an option to go for either delivery or cash settlement.

Source: The Hindu October 24, 2021 02:07 UTC