When contracts of coin-margined futures, USDT-margined futures, or coin-margined options expire, delivery/exercise will occur. The platform will calculate delivery or exercise price with weighted averages of the index prices in the last hour before expiration, and execute in digital asset price difference to close the positions on all expired contracts, namely, transferring the profits or losses generated by delivery/exercise to users accounts.
If there are still some pending orders at the settlement time, these orders will be cancelled, and all the positions will be delivered(exercised) at the delivery(exercise) price.
User 0 opened a long position at a price of $15,000 with 1,000 contracts in BTCUSD1204 weekly futures. He hold it till the delivery, which happened at 4:00 p.m. on Dec 4th (HK time). Base on the 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
User K held 100 short options contracts ETHUSD-20201204-600-P until the expiration date, 4:00 pm on Dec 4th (HK time). The exercise price calculated based on the weighted average of the index price one hour before the expiration(3 pm-4 pm) was $580, 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 * 1 * (-100) * (600 - 580) / 580 = -3.4483 ETH
After the contract was exercised, the short position of options contract ETHUSD-20201204-600-P was closed, and the account balance of user K was reduced by 3.4483 ETH (regardless of transaction fees).
In extreme markets, users’ account balance after the settlement may be a negative number due to a big loss. In this case, the negative part will be covered by the insurance fund, and a bill will be created for the user’s account, named as Delivery clawback or Exercise clawback.