GammaI see your point, but when we talk about settlement of prices, then surely we are saying let's agree on a price now, rather than let's see what happens tomorrow and I accept whatever happens then...Also, with Asian options we have agreed to take the risk of not knowing the final value of the option as a conscious decision. With settlement, as far as I understand it, is literally to settle...the cash may be paid later, but parties know where they stand because they have settled...

Sam,Remember what counts as the cash settlement for the Brent contract isn't a spot price or the final day's traded IPE price, but another price, the average (with extreme values removed) of broker's estimates of the Brent (now BFO, Brent Forties Osberg) 15 day market, otherwise known as Dated Brent. Now theoretically, the last day of the IPE should roughly co-incide with the nearest loading window of the Brent 15 day market, so convergence of a sort is maintained. This is what consititutes the Brent Index, which is used in the settlement. I think this also answers michael's question about fixed values - it is a bit like settlement at the close feature of equity markets with market makers (NYSE), except it is settlement at an average. So, you don't know what your price is going to because you can't see it on the IPE, if you only cash settling the contract. You can see the Brent Index daily (ex-post), but is better to keep your ears and eyes tuned to the Dated Brent OTC market to see where settlement is likely to be.gammashark.