Delivery Option

Delivery Option - A feature added to future contracts predetermining the short position of timing, quantity, location and quality of any commodity reflected in the delivery notice. A delivery option provided a huge amount of flexibility for the individual making the delivery of underlying commodities, but it poses a risky venture for the expecting investors. The option of the seller in an interest rate futures contract to take when negotiating the settlement of an obligation. It is a wild card option for the sake of the contract. In such contracts, the buyer is facing a level of uncertainty in terms of delivery date.