Delivery Notices
Chapters in this video
- 0:00 When paper futures become literal wheat
- 1:15 The three-step path: short to clearinghouse to long
- 2:22 Transferable vs non-transferable: hot potato or glued hand
- 3:04 How retendering actually works: market execution, not paperwork
- 4:10 What happens when the retendering window closes
- 5:07 Non-transferable notices: no escape hatch
- 5:51 The exam trap: do not assume all notices can be retendered
- 6:22 Rapid-fire exam recap
What this video covers
- What a delivery notice is: the short's written notice of intention to deliver, submitted to the clearinghouse, which then assigns it to a specific long
- How the delivery notice transforms a paper obligation into a physical impending delivery, and why nothing moves until the notice is issued
- What retendering means: reselling an offsetting futures contract to pass a transferable notice to another long, not merely refusing or returning paperwork
- Why retendering requires an actual market execution of selling an offsetting futures contract within the exchange's short window
- What happens when a long misses the retendering window for a transferable notice: they are locked into taking delivery
- How a non-transferable notice differs: the first long assigned cannot pass it on and must accept delivery
- The exam's biggest trap: do not assume every notice can be retendered; only transferable notices can be passed on, and non-transferable notices commit the long to delivery
Read the full lesson, free
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