Deliver
"Deliver" means to actually hand over the underlying shares (or, in some cases, cash) to complete a trade obligation, rather than just closing out a position on paper. It comes up most often with options: when an option is exercised or assigned, someone on the other side of that contract has to deliver something, and someone has to receive it.
In practice, most option traders never deliver or receive stock, because they close their position (buy back a short option or sell a long one) before it gets exercised. Delivery only becomes real when an option is actually exercised by its holder and a matching contract is assigned to a writer. At that point the clearing mechanism steps in and forces the transfer: shares move from one account to another, and cash moves the opposite way at the option's strike price.
The mechanics run in two directions depending on which side of which contract you hold. If you wrote (sold) a call option and get assigned, you must deliver 100 shares per contract to the trader who exercised the call, and you receive cash equal to the strike price times 100 shares. If you hold a put option and choose to exercise it, you are the one delivering the shares, this time to the trader who wrote the put and got assigned; you receive cash equal to the strike price times shares delivered.
The nuance that trips people up is that delivery obligations can appear even if you did nothing wrong: assignment on a short option is essentially random and out of your control, and if you did not already own the shares (a "naked" call) you may suddenly need to buy them on the open market just to deliver them, at a price that could be worse than the strike. Delivery is also tied to settlement timing, meaning there's a gap of a business day or more between when the trade is agreed and when shares and cash actually change hands, and the exact settlement period is a rule that changes over time.
This term depends on a rule or threshold that changes over time, so no specific figure is quoted here. The definition references settlement timing (the gap between trade date and when shares/cash must actually change hands) without stating a specific number of days. A human editor should confirm the current standard settlement cycle (e.g., T+1, T+2) with the relevant exchange/clearing house (such as DTCC or the SEC) before publishing, since this has changed in recent years and may change again.
A day trader who is short options needs to know that assignment can force a real stock delivery obligation overnight, potentially requiring capital or shares they don't have on hand by the next settlement date.
A trader sells one call option on a stock with a strike price of $50, and does not own the underlying shares. The stock rallies to $55 and the call is exercised by its holder. The trader is assigned and must deliver 100 shares at $50 each; since they don't own the shares, they have to buy 100 shares at the current market price of $55 to fulfill the delivery, taking a $500 loss on the stock leg alone, before considering the premium they originally collected.
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