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Delivery notice

The document a short position files to start physical delivery, which the clearing house then assigns to a long.

The short controls the timing. During the delivery period a short files notice with the clearing-house, which allocates it to a long holder — usually the one with the oldest position — who must then pay the invoice amount and take the goods.

The long has no say. This asymmetry is exactly why brokers close retail accounts out of deliverable contracts days before first-notice-day rather than trusting customers to act.

Example: a trader long one December gc contract at $2,400 who is assigned receives 100 ounces of vaulted gold and is invoiced roughly $240,000 — against maintenance margin that was under $10,000.

Related: first-notice-day, last-notice-day, physical-delivery, clearing-house, warehouse-receipt

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

Margin and leverageA small deposit controlling a much larger position, and the point at which losses trigger a margin call.Position you controlnotional value $100,000your margin deposit: $5,000$100,000 / $5,000 = 20:1 leverageYour deposit absorbs every dollar of loss$5,000$2,500$0Equity leftMARGIN CALLequity has fallen to $2,5000%1%2%2.5%3%4%5%How far the price moves against you
Margin and leverage. A $5,000 deposit can control a $100,000 position, which is 20:1 leverage. Because the loss is measured on the full $100,000, a 2.5% move against you halves the deposit and brings a margin call, and a 5% move uses all of it.

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