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Offset

• Elimination of a long or short position by making an opposite transaction. Related: liquidation.

• To liquidate a futures position by entering an equivalent but opposite transaction. To offset an initial purchase, a sale is made; to offset an initial sale, a purchase is made. See also: Futures Market.

 
 Embedded terms in definition
 Futures market
Futures
Liquidation
Long
Market
Position
Purchase
Sale
Short position
Short
 
 Referenced Terms
 Actual hedging: Is the risk management of a position when a hedger has a bona fide long or short actual position and is involved in an Offsetting transaction. This offset is usually in the derivatives market.

 Advance commitment: A promise to sell an asset before the seller has lined up purchase of the asset. This seller can Offset risk by purchasing a futures contract to fix the sales price.

 Bankruptcy cost view: The argument that expected indirect and direct bankruptcy costs Offset the other benefits from leverage so that the optimal amount of leverage is less than 100% debt financing.

 Blended trade: Is the combination of two or more bonds or tranches executed as a single position. Often this is done to Offset the individual, lopsided risks in two very different instruments. By doing such a trade, an investor or portfolio manager is trying to create a more stable investment.

 Buy in: Occurs when a seller or short seller fails to deliver the securities required to satisfy a transaction's terms. The net financial impact of this transaction is charged to the account of the seller.To cover, Offset or close out a short position. Related: evening up, liquidation.

 
 Related Terms
 Mutual offset

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