Liquidating Long and Short Positions

What this video covers

• What offsetting (liquidation) actually means: an equal and opposite transaction in the same commodity, delivery month, and exchange that cancels the original position and leaves the trader flat
• The exact match rule and why a different delivery month creates a brand-new spread position instead of closing the original
• The direction of the offsetting trade for longs versus shorts, and why the exit is always the reverse of the entry
• Why a long offsets by selling and a short offsets by buying back, and how flipping that direction describes opening a new position
• What open interest measures: the total number of futures contracts, long or short, not yet offset or fulfilled by delivery
• How open interest falls when both parties close, stays unchanged when one party passes to a new trader, and rises only when two new traders both open
• Why most futures positions are offset before delivery: faster, cheaper, and avoids the logistical headache of physical commodities, especially for speculators