Closing a position refers to selling the originally bought contract or buying the originally sold contract. After closing the position, lighten the position, closing the short position is equivalent to buying, and closing the long position is equivalent to selling.
The whole process of futures trading can be summarized as opening positions, holding positions, closing positions or physical delivery.
Futures and spot are completely different. Spot is actually a tradable commodity. Futures are mainly not commodities, but standardized tradable contracts with some bulk products such as cotton, soybeans and oil and financial assets such as stocks and bonds as the targets. Therefore, the subject matter can be commodities (such as gold, crude oil and agricultural products) or financial instruments.
Opening a position, also known as opening a position, refers to the new purchase or sale of a certain number of futures contracts by traders.
Position: Before the expiration of physical delivery or cash delivery, investors can voluntarily decide to buy and sell futures contracts according to market conditions and personal wishes. However, investors (bulls or bears) hold futures contracts without performing reverse operations (selling or buying) with the same delivery month and quantity. This operation is called "holding positions".
Closing position refers to the behavior of futures traders to buy or sell futures contracts with the same variety, quantity and delivery month, but in the opposite direction, and to close their positions. Simply put, it means "sell what you bought and buy what you sold (short)."
Physical delivery refers to the behavior of the buyers and sellers of futures contracts to close the positions of the expired open contracts by transferring the ownership of the subject matter of futures contracts in accordance with the rules and procedures formulated by the exchange. Commodity futures trading generally adopts the way of physical delivery. After entering the delivery period, the seller submits the standard warehouse receipt, and the buyer submits the full amount, and goes through the delivery formalities at the exchange.
Futures contract refers to the standardized contract formulated by the futures exchange, which stipulates to deliver a certain quantity and quality of physical or financial goods at a specific time and place in the future.