Delivery points are where commodities like gold, oil, wheat, etc., are transferred from the sellers to the buyers. They could be warehouses to hold the goods or designated sites the exchange selects for delivery. The delivery point can impact the overall trading cost, so it’s important to consider it before placing an order.
How Delivery Points Work
Delivery points are designated places where commodities are transferred when a trade is settled. If a trader holds a contract until expiry, they must deliver the product to that point or take it out for delivery. Exchanges designate these points to ensure that the trade settles smoothly. However, most traders sell their contracts before expiry to avoid physical delivery.
Benefits of Choosing the Right Delivery Point
Some of the most important benefits of choosing the appropriate delivery point are:
- Cost Efficiency: Choosing a nearer delivery point saves on transport costs, allowing you to save money.
- Convenience: A conveniently positioned delivery point assures convenient access to your goods, minimizing delays.
- Better Pricing: Prices can change at various delivery points based on transportation and handling charges. Selecting a strategic location can provide you with better value.
Conclusion
Choosing the right delivery point is essential for managing costs and ensuring smooth delivery of goods. Since prices can vary based on location, selecting a suitable delivery point can help save money and make the process more convenient. It is advised that traders consider distance, transport costs, and storage conditions before finalising their delivery point.