Cash Settlement
A settlement method where no physical asset changes hands at expiration — the contract settles to a final index or reference price in cash.
Cash settlement is the dominant settlement method for financial futures. Rather than delivering the underlying (e.g. all 500 S&P constituents), the open position is simply marked to the final settlement price and the net gain or loss is credited or debited in cash.
For ES and NQ, the final settlement price is the Special Opening Quotation (SOQ) of the S&P 500 or Nasdaq-100 on the third Friday of the expiry month. Positions are squared at this price and then closed.
Cash-settled contracts eliminate delivery logistics but do not eliminate the risk of the final price differing from the prior day's close — which is why many traders roll well before expiry.