Futures contracts are standardized agreements to buy or sell assets at a predetermined price on a specified future date. There are three main ways to settle a futures position: physical delivery of the underlying asset, offsetting the position by entering an opposite trade, or cash delivery where the position is settled at the market price without physical delivery. Most traders use offsetting since it is simpler than physical delivery and avoids costs associated with storing, insuring, and transporting physical assets. Cash delivery provides an alternative settlement for contracts where physical delivery is not practical.