Offset

(redirected from offsets)
Also found in: Dictionary, Thesaurus, Medical, Legal, Encyclopedia, Wikipedia.
Related to offsets: Carbon offsets

Offset

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

Offset

To change from a long position to a short position or from a short position to a long position. A long position is ownership of a security, while a short position is debt. Thus, to offset a long position is to sell a security, and to close a short position is to buy out the debt.

offset

The liquidation of a futures or option position by purchasing (for a short position) or selling (for a long position) an equal number of identical contracts so that no further obligation exists.

Offset.

You offset an options or futures position by taking a second position in a contract with identical terms, buying if you sold initially or selling if you bought initially.

With the offset, you neutralize any potential obligation you had to fulfill the terms of the contract, and you may make a profit or reduce a loss with the transaction.

For example, if you'd sold an equity call option that is close to being in-the-money, you might buy an offsetting call option. That neutralizes your obligation to deliver the underlying stock if the option you sold is exercised.

In a tax context, you can use capital losses to offset an equivalent dollar amount of capital gains, or up to $3,000 in capital losses to offset ordinary income. In either case, the offset allows you to reduce the tax you owe.

Further, banks have the right of offset if a borrower defaults on a loan. That right allows a bank to seize assets in the borrower's deposit accounts with the bank to reduce or eliminate any loss on the loan.

References in periodicals archive ?
countries such as Poland, Hungary, Greece, and Portugal make offsets an
only one of several criteria, (35) but even if offsets have relatively
matched, offsets became a key deciding factor in the procurement.
and offsets are located in regions dealing with significant corruption.
Finally, offsets are vulnerable to corruption because they often
According to the Department of Commerce, forty percent of offsets, as
measured by actual value, are "direct" offsets, meaning they
49) In contrast, fifty-nine percent of offsets, as measured
by actual value, are "indirect" offsets, meaning they are
1980s, the F-18 sale to Spain involved indirect offsets promoting
tourism, (54) and in the 1990s, Greek indirect offsets financed
Another reason offsets are susceptible to corruption is their