# IV. Introduction to delivery/exercise rules

OKX

When contracts of futures and options expire, settlement and delivery will occur.

The platform will calculate settlement prices using the time-weighted average of the index prices in the last hour before expiration and automatically transfer the profits or losses to users' accounts.

All the positions will be settled and delivered at the settlement price. If there are pending orders at settlement time, these orders will be cancelled.

The settlement price of futures and options are available in the trading information section: future settled and option exercised.

Please refer to the fee rate for settlement fee of futures and exercise fee of options.

In extreme markets, users’ account balance after the settlement may become negative due to a big loss. In this case, the negative part will be covered by the insurance fund, a bill will be created the user's account.

Example 1: User A opened a long position at a price of \$15,000 with 1,000 contracts in BTCUSD1204 weekly futures. He held it till the delivery, which happened at 4:00 p.m. on Dec 4th (HK time). Based on the time-weighted average of the index price in the last hour before the expiration, the delivery price is \$19,000, then the profit/loss for him is: Face value * number of contracts / avg. opening price – face value * number of contracts / exercise price = 100 * 1,000 / 15,000 - 100 * 1,000 / 19,000 = 1.4035 BTC

Example 2: User B held 1000 short options contracts ETHUSD-20230929-1600-P until the expiration date, 4:00 pm on Sep 29 (HK time). The settlement price calculated based on the time-weighted average of the index price one hour before the expiration was \$1580, lower than the strike price of the put options contract. So this contract was successfully exercised, and the profit/loss generated was as follows: Face Value * Contract Multiplier * Amount of Holding Positions * (Strike Price – Exercise Price)/ Exercise Price= 1 * 0.1 * (-1000) * (1600 - 1580) / 1580 = -1.2658 ETH

After the contract was exercised, the short position of options contract ETHUSD-20230929-1600-P was closed, and the account balance of user B was reduced by 1.2658 ETH (regardless of exercise fees).