Delivery settlement & cash settlememt

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"Anant" (Querist)
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16 September 2010 Sir/Madam,

What exactly is meant by delivery settled and cash settled? What is the difference between the two in practical situations? Plz illustrate using an example.

ALLU

ALLU (Expert)
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17 September 2010 hi Anant,

Takea an example of GOLD trading on MCDX stock exchange

suppose you have bought 10 GMS OF GOLD AT RS 10,OOO NOW IN THE SCRIPT BY NAME

NOV GOLD

LET THE GOLD RATE INCREASED BY RS12,000 ON THE DATE NOVMEBER 30 2010

PROFIT = 10(12000-10000)

= 10*2000
=20000

NOW EITHER YOU CAN TAKE THIS RS 20000 AS CASH IN TO YOUR ACCOUNT

OR

ASK THE EXCHANGE (MCDX) TO PROVIDE YOU THE 10 GMS OF GOLD (DELIVERY BASED)