What does Offset Transaction mean?
Offsetting a transaction means to enter into an equivalent but opposite transaction, eliminating the delivery obligation. In such a transaction, the investor will offset the futures transaction in order to eliminate any linked liabilities. The investor would not incur any future gains or losses from the position. The offset transaction needs to take place before the terms and conditions of the futures contract are met by either party and the contract is realized.
Futures Knowledge Explains Offset Transaction
For example, if the futures contract was entered into to purchase, to counterbalance, a sale would be entered into as an offsetting transaction; i.e. if a trader has entered into a long transaction, a short transaction would be required to be made to offset the long position.