Forward Freight Agreement Settlement
FFA cash-settled P/L: (Settlement index − Strike) × days × lot size.
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Formula, assumptions, and limits
| Symbol | Meaning | Unit |
|---|---|---|
| Contract fixed rate | USD/day or USD/t | |
| Baltic average over period | USD/day or USD/t | |
| Days (or tonnes) in contract | ||
| Number of lots |
Source: Baltic Exchange - FFA index
In short
FFA cash-settled P/L: (Settlement index \u2212 Strike) \u00d7 days \u00d7 lot size.