Settlement price is the official closing price used for daily mark-to-market calculations, margin adjustments, and contract settlements in futures and options markets. Settlement prices are determined by exchanges using specific methodologies that may differ from the last traded price, ensuring fair and representative valuations for risk management purposes.

Settlement price determination typically involves volume-weighted averages, closing periods, or committee decisions to prevent manipulation and ensure accurate position valuations. These prices affect margin calls, profit/loss calculations, and contract delivery obligations. Understanding settlement mechanisms helps traders manage margin requirements and position risks.

Real-world example: NYMEX crude oil futures settle at $75.50 per barrel based on trading activity during the final two minutes, differing from the last trade at $75.45, with the settlement price used for daily margin calculations across all open positions.