Offset

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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 ?
Of the 3,600 people polled, 30 per cent had never heard of a carbon footprint while 35 per cent had never heard of carbon off-setting
The area of carbon management and off-setting is new and evolving fast, and organisations aspiring to practise their CSR principles are well advised to seek advice.
'There will also be some of the long-desired rebalancing in the economy through 2006 as household consumption remains constrained and government spending slows relative to recent years, with growing export demand off-setting these factors.The trade-off between growth and inflation though worsens in 2007.
Off-setting these drivers are continued uncertainty about industry fundamentals like job growth and confidence, which continue to curtail market expansion.
First time listeners won't expect Joe Dennis' fanciful atmospheric vocals off-setting Cory Race's maddening 7/8 drumming, Ryan Brannon's heavy bass groove and Stillman's hundred notes a measure.
Property prices in England and Wales rose by 0.4 per cent for the second month in a row during the four weeks to October 20, off-setting price falls seen earlier in the year.
Our table shows just how much you can trim off your mortgage term by off-setting your savings against the amount you owe.
However, Drouhard explains, "The Sandvik folks suggested off-setting the cutters so they were not all turning at the same part of the cut.