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Community User Posted on 03:14pm 14-Nov-2019

Can I settle my open future position before expiry of the contract?

Yes, the futures contract can be settled before expiry. In derivatives markets most of the participants make an exit from their futures contract before expiry. This can be done by either selling the same contract to some other party or by taking an opposite position in a new contract which has the same expiry and contract price. The latter would nullify your original position.

For example, an investor holds a long position in a 3 Month futures contract, after 2 months he can either sell his contract to another buyer or he can take a short position in a 1 month future contract. The profits and losses would be credited to and debited from your margin account after the adjustment of margins.

 

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