• 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|
| ||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|