Future Contracts Position

Future Contracts Position

Future contract position means that you have entered into a future contract. Future contract position can be classified into following

Open Position

Open position of future contract may further be classified into short term position & long term position.

1.    Short Term Position

In this position you have sold something, where you have not previously bought. In simple term you are selling before buying. This position would be settled by future buying.

2.    Long Term Position

In long term position you have bought, which is not previously sold. This position would be settled by future selling at future date.

Closing Position

1.    Settlement 
   One is required to close the open position by settlement. It means that you need to execute      the contract on settlement date. Short position is settled by selling (you committed to sell)        and long position is settled by buying (you committed to buy).

2.    Liquidation

Other way is settlement of future is to enter into a reverse transaction on or before settlement date. It means that short position may be settled by buying & and long term position is settled by selling.