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← Series 7: Order Processing & Trade Settlement
Series 7 practice questionmediumTrade Settlement — Seller's Option

In a seller's option settlement, the seller may deliver securities:

  1. AOnly on the regular way settlement date
  2. BOnly on the specific date agreed upon, with no flexibility
  3. CAny time from T+2 through the agreed-upon date, provided one day's written notice is given✓ Correct answer
  4. DWithin T+0 to T+1 at the seller's discretion
Explanation

Why C — Any time from T+2 through the agreed-upon date, provided one day's written notice is given

A seller's option contract allows the seller to deliver the securities at any time from T+2 through the agreed-upon settlement date, provided the seller gives the buyer one business day's written notice of the intended delivery date. This type of settlement is used when the seller needs additional time beyond regular way settlement to deliver the securities. The minimum settlement for a seller's option is T+2 because T+1 is already the regular way settlement period.

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