Offsetting positions

1) Taking an equal and opposite futures position to a position held in the cash market. The offsetting futures position constitutes a hedge; 2) Taking an equal and opposite futures position to another futures position, known as a spread or straddle; 3) Buying a futures contract previously sold, or selling a futures contract previously bought, to eliminate the obligation to make or take delivery of a commodity. When trading futures options, an identical option must be bought or sold to offset a position.