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 ?
The introduction of a European equivalent to the US annual survey of offset agreements, including impact analysis (Bureau of Industry and Security, 2013), would be an important first step towards remedying the offset data vacuum.
This paper has explained the nature of defense offset and sought to establish the rationale behind the EC's ideological push to eventually eradicate offset from the European defense market.
Moreover, criticizing offset as being anti-competitive and market-distorting carries a strange logic, because little about defense is reflective of an open and efficient market.
The EDA's Code of Conduct and the later EC Procurement Directive represent a direct assault on offset, even though linked indirectly to procurement reform.
Their rationale for the continuation of offset is based on four factors: the health of their defense industries is highly dependent on work sourced through offset; the impact of this work is not insignificant, given that in Europe, national defense procurement stands at around 75 per cent of total defense procurement; the legislation is too draconian, in the sense that small offset-dependent nations need time to reduce such dependence; and finally whilst Europe has sought to free-up its defense market and dramatically restrict offset activity, the approach has been unilateral, rather than linked to a global consensus.
Offset is, and will always be, a controversial issue.
practices add an extra layer of complexity to offset transactions.
During the selection phase, an offset proposal may be
offset may be satisfied by a vendor earning offset credit, and not by
The first accounting practice is that offset agreements specify the
level of offset activity required by expressing it as a percentage of
at least thirty percent of its value as offset activity.