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


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.


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.


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 ?
Based upon these results, we reject null hypothesis 1 and 2 and conclude that offsetting the position of the humerus in the posterior/superior direction using the offset humeral tray impacts both muscle length and moment arms with rTSA.
Savings figure, [pounds sterling]1,296, is based on reduction in monthly payment by offsetting [pounds sterling]50,000 then x 12 to illustrate saving over a year.
Special hedge accounting should be provided, but limited to transactions involving offsetting changes in fair value or cash flows for the risk being hedged.
The survey also found: one third thought offsetting their holiday CO2 emissions would cost them dearly, with 10 per cent thinking it would cost up to pounds 500 to offset a flight to New York when the real figure was less than pounds 10
As described above, loss is deferred to the extent of unrecognized gain in any offsetting position held at the end of the tax year.
In certain situations involving offsetting, the IRS does net, despite Congress's seeming recognition of the need for a rate differential.
Offsetting helps underwrite the development of a renewable energy infrastructure.
The Commissioner's Advisory Group has also addressed the interest-netting issue and proposed an interest equalization computation to achieve the same mathematical result as the more cumbersome process of offsetting actual tax liabilities and refunds.
The ED Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts addresses inconsistencies between accounting for reinsurance and the general criteria for offsetting.
Dell recognizes that offsetting carbon dioxide emissions with tree planting is an effective and inexpensive way to fight climate change," Carbonfund.
The rule generally seeks to prevent the newly acquired loss carryovers from offsetting income generated prior to the acquisition date.