Open
position is the number of contracts registered by the clearing house
which are not offset by other contracts or tenders when the contracts become
spot (the nearby contract month). For example, a coffee trader may have a
position with the clearing house of 30 purchase contracts and 40 sales
contracts. Some of the purchases and sales may be for the same delivery month
but the trader may have labeled them as 'wait for instructions' if those
contracts represent separate hedging transactions for that trader. This means
the trader will enter into additional futures deals to offset them once they
unwind the physicals against which the original hedge was taken. In other words,
the open position of that particular operator remains 70 lots until some of the
contracts are offset or 'washed out'.
The clearing house reports only the total of all
operator positions, rather than that of any one member, which is left to the
broker to report. The CFTC's commitment of traders (COT) report breaks down the
total open interest on the New York 'C' contract by category of traders. Large
traders are called reportable, while small traders are non-reportable. The COT
report then further breaks down the open interest by commercial and
non-commercial reportable traders. It is a very handy tool for exporters to get
an idea of the long or short positions of the large speculative hedge
funds.