Which one of the following statements is correct?
A)Futures contracts must be held to maturity.
B)Futures contracts can be closed out only by contract buyers.
C)Futures contracts can be closed out, but only during the week prior to maturity.
D)You cannot avoid accepting delivery once you purchase a futures contract.
E)Futures contracts can be closed out by entering a reverse trade.

Question

Quizplus · Accepted Answer

Futures contracts can be closed out by entering a reverse trade, where the original position is closed out by taking an opposite position in the same contract. This allows traders to exit their positions before maturity and avoid delivery of the underlying asset.

Which One of the Following Statements Is Correct