The process by which the terms of an option contract are fulfilled through the payment or receipt in dollars of the amount by which the option is in-the-money as opposed to delivering or receiving the underlying stock.
See Also:
Settlement: The process by which the underlying stock is transferred from one brokerage account to another when equity option contracts are exercised by their owners and the inherent obligations assigned to option writers.
Cash Settlement Amount: The difference between the exercise price of the option being exercised and the exercise settlement value of the index on the day the index option is exercised.
