What is open in the finances?

Also known as an open interest is an open position of any type of financial transaction that has not yet been closed through the corresponding opposite transaction. Until the two components are fully performed, the transaction is not considered complete or closed. Although this term can be used on any financial situation where the transaction has not been compared corresponding to the opposite transaction, this term is most often used to indicate the state of futures contracts in the specified month of delivery.

In the widest sense, the transaction is open any type of financial agreement in which the purchase or sale was agreed, but the agreement has not yet been resolved in some form of physical payment. There are also a state of open position, if there was any agreement to perform the current transaction that moved in the opposite direction, but this transaction has not yet occurred. Until the two processes are completed, the agreement is still ongoing, and therefore open.

Easy illustration would be two individuals who decide to sell each other their private vehicles. One individual provides a full payment for the opposite vehicle and takes control of the purchase. The second individual must still portray the payment for the second vehicle, so the agreement between the two remains incomplete or open. In order to conclude the agreement, the second individual must either follow, make a payment and take control of the car, or return the payment received from the first party and regain control of its original vehicle. Both solutions would move the agreement from open to closed state.

Open position can be in the form of a clean long position or in a clean short position. The key is that the asset has been delivered or is delivered without coverage. This means that there has not been a corresponding transaction to complete the process and thus leave the transaction in an open state. Once a contradictory transaction takes place, then the position is no longer open, but is considered to be completed in full.

Futures market is a page of many futures contracts that are in an open position in any given month of delivery. There are a number of reasons why the contract may be open, including the fluctuations of the market currently taking place, and the fact that some of these futures contracts have a long position, which means that they should not be concluded in the current delivery month. The open position is not an undesirable status and is often simply once a strategy for the location of futures Holdings to eventually realize the best possible return on investment.