Cfa level 1 derivatives

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Cfa level 1 derivatives

Postby mehak.officiallink » Tue Apr 01, 2014 4:00 am

What is squaring off ? Can you please give an example for the same? And why is squaring off done ?

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Cfa level 1 derivatives

Postby pradeeppdy » Tue Apr 01, 2014 6:34 am

Squaring off means covering or taking the opposite position for your original position. For eg You went long or buy Nifty Futures contract and before expiry you have to go short (opposite position ) to close your original long position. This opposite short position is called squaring off. Whatever is the profit loss , It will be adjusted to your trading a/c. Similarly vice versa if you have taken a short position and you take long position to square off the contract. So squareoff means closing your derivatives contract before expiry.

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