These newer contracts also incorporated the feature of cash settlement. Thus, if one bought a futures contract on the S&P 500-Stock Index at a price of $2,000, the seller would not deliver a package of the 500 stocks on the expiration date. Rather, the contract would be settled in cash on the basis of the difference between $2,000 and the value of the index on the settlement date. Today, trading in financial futures represents well over half of the total futures trading.
