Futures expiry and settlement (cash vs physical)

Unlike perpetuals, dated futures have an expiry, commonly the last Friday of a month or quarter. At that moment the exchange closes all open contracts at a settlement price, usually an average of the index over a short window. In cash settlement, which CME and most crypto exchanges use, profits and losses are paid in dollars, stablecoins or the coin. In physical settlement, the long receives the actual asset and the short delivers it.

Traders who want to keep exposure past expiry roll their position, closing the expiring contract and opening the next one. Quarterly expiries of CME bitcoin futures, together with large options expiries, are tracked because rolling and closing can produce unusual volume and basis moves in the days around them.

Settlement prices are averages, so the final value can differ from the last traded price. Expiry dates and times vary by venue, and holders who forget about expiry may find a position closed at a price they did not choose. Physical delivery also requires the account to hold the asset or cash to complete it.