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Cash settlement (warrants)
Cash settlement (warrants) Form of settlement in which the issuer of the warrant pays a cash sum to the warrant holder instead of delivering the underlying instrument.
If the underlying instrument cannot be physically delivered to the warrant holder (e.g., in the case of index warrants), the contract is settled in cash. The difference between the strike price stipulated in the contract and the current market value of the underlying instrument is calculated and paid to the warrant holder.