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Offset

Offset

What does 'Offset' mean

An offset involves assuming an opposite position in regards to the original opening position. Additionally, to offset is to liquidate a futures position by entering an equivalent but opposite transaction that eliminates the delivery obligation. The goal of offsetting is to reduce an investor's net position in an investment to zero so that no further gains or losses are experienced from that position.

Explaining 'Offset'

Offsetting can be used in a variety of transactions in to remove or limit liabilities. In accounting, an entry can be offset by an equal but opposite entry that nullifies the original entry. In banking, the right to offset provides financial institutions with the ability to cease debtor assets in the case of delinquency or the ability to request a garnishment to recoup funds owed. For investors involved in a futures contract, an offsetting position eliminates the need to receive a physical delivery of the underlying asset or commodity by selling the associated goods to another party.

Offsetting in Futures Contracts

Investors offset futures contracts and other investment positions to remove themselves from any associated liabilities. Almost all futures positions are offset before the terms of the futures contract are realized. Even though most positions are offset near the delivery term, the benefits of the futures contract as a hedging mechanism are still realized.

Example of Offsetting Positions

If the initial investment was a purchase, a sale is made to neutralize the position; to offset an initial sale, a purchase is made to neutralize the position.


Further Reading

Seigniorage of Central Bank and Offset of Fiscal Deficit [J]Seigniorage of Central Bank and Offset of Fiscal Deficit [J]
en.cnki.com.cn [PDF]
… Seigniorage of Central Bank and Offset of Fiscal Deficit … 2, GUO Jia, MAO Chong (Southwest University of Finance and Economics, Chengdu, Sichuan 610074, PR China);A Study of International Seigniorage of the US Dollar[J];Journal of Guizhou College of Finance and …

Understanding carbon offset technologiesUnderstanding carbon offset technologies
www.tandfonline.com [PDF]
… Seigniorage of Central Bank and Offset of Fiscal Deficit … 2, GUO Jia, MAO Chong (Southwest University of Finance and Economics, Chengdu, Sichuan 610074, PR China);A Study of International Seigniorage of the US Dollar[J];Journal of Guizhou College of Finance and …

The Dynamic Relationship between Two Surpluses of BOP and Monetary Supply in China: 1994-2007——Based on the Offset Coefficient and Sterilization Coefficient …The Dynamic Relationship between Two Surpluses of BOP and Monetary Supply in China: 1994-2007——Based on the Offset Coefficient and Sterilization Coefficient …
en.cnki.com.cn [PDF]
… Seigniorage of Central Bank and Offset of Fiscal Deficit … 2, GUO Jia, MAO Chong (Southwest University of Finance and Economics, Chengdu, Sichuan 610074, PR China);A Study of International Seigniorage of the US Dollar[J];Journal of Guizhou College of Finance and …

The offset as a specific sort of economic activityThe offset as a specific sort of economic activity
papers.ssrn.com [PDF]
… Seigniorage of Central Bank and Offset of Fiscal Deficit … 2, GUO Jia, MAO Chong (Southwest University of Finance and Economics, Chengdu, Sichuan 610074, PR China);A Study of International Seigniorage of the US Dollar[J];Journal of Guizhou College of Finance and …

How to offset the negative trend growth rate in the Italian economy?How to offset the negative trend growth rate in the Italian economy?
www.tandfonline.com [PDF]
… Seigniorage of Central Bank and Offset of Fiscal Deficit … 2, GUO Jia, MAO Chong (Southwest University of Finance and Economics, Chengdu, Sichuan 610074, PR China);A Study of International Seigniorage of the US Dollar[J];Journal of Guizhou College of Finance and …

An Analysis on the Effectiveness of China's Capital Controls and Sterilizations Based on the Offset and Sterilization Coefficient Model [J]An Analysis on the Effectiveness of China's Capital Controls and Sterilizations Based on the Offset and Sterilization Coefficient Model [J]
en.cnki.com.cn [PDF]
… Seigniorage of Central Bank and Offset of Fiscal Deficit … 2, GUO Jia, MAO Chong (Southwest University of Finance and Economics, Chengdu, Sichuan 610074, PR China);A Study of International Seigniorage of the US Dollar[J];Journal of Guizhou College of Finance and …

Forest carbon offset market and possible resolutions for China's market developmentForest carbon offset market and possible resolutions for China's market development
en.cnki.com.cn [PDF]
… Seigniorage of Central Bank and Offset of Fiscal Deficit … 2, GUO Jia, MAO Chong (Southwest University of Finance and Economics, Chengdu, Sichuan 610074, PR China);A Study of International Seigniorage of the US Dollar[J];Journal of Guizhou College of Finance and …

The Offset-coefficient Model and Capital Mobility: An Empirical Analysis on Capital Mobility in East Asia [J]The Offset-coefficient Model and Capital Mobility: An Empirical Analysis on Capital Mobility in East Asia [J]
en.cnki.com.cn [PDF]
… Seigniorage of Central Bank and Offset of Fiscal Deficit … 2, GUO Jia, MAO Chong (Southwest University of Finance and Economics, Chengdu, Sichuan 610074, PR China);A Study of International Seigniorage of the US Dollar[J];Journal of Guizhou College of Finance and …

Efficient estimation and testing of oil futures contracts in a mutual offset systemEfficient estimation and testing of oil futures contracts in a mutual offset system
www.tandfonline.com [PDF]
… Seigniorage of Central Bank and Offset of Fiscal Deficit … 2, GUO Jia, MAO Chong (Southwest University of Finance and Economics, Chengdu, Sichuan 610074, PR China);A Study of International Seigniorage of the US Dollar[J];Journal of Guizhou College of Finance and …

What future for the voluntary carbon offset market after Paris? An explorative study based on the Discursive Agency ApproachWhat future for the voluntary carbon offset market after Paris? An explorative study based on the Discursive Agency Approach
www.tandfonline.com [PDF]
… Seigniorage of Central Bank and Offset of Fiscal Deficit … 2, GUO Jia, MAO Chong (Southwest University of Finance and Economics, Chengdu, Sichuan 610074, PR China);A Study of International Seigniorage of the US Dollar[J];Journal of Guizhou College of Finance and …


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Section 508

WCAG 2.0

Section 508