What are offsetting contracts?
A. In practice, only a small percentage of futures contracts traded are actually held to delivery. Maturing futures contracts expire on specific dates during the contract month. Your broker can supply you with expiration dates. At any time before the month the contract matures, the trader may close out his obligation through an opposite or offsetting trade. By offsetting the futures contract, the trader cancels any obligation he has to take delivery of the underlying commodity. For example, the buyer of an April Gold contract can sell that contract before April. The difference between the price when the trade was initiated and the price when it was offset is the gain or loss on the trade.
