Suppose I buy a futures contract and later, before expiry date, I sell it out. Is something physically exchanged between myself and the buyer, e.g. a paper certificate specifying the contract's details? If not, what is it that changes to reflect this transaction? Is it the table row that identifies this contract in the futures exchange's database that is updated with the new buyer's name replacing my name in the "buyer" column? Or perhaps it is not actually possible to sell a futures contract or change its details once it is established, and the closest you can get is to emulate the effect of selling it by entering into a completely new futures contract, but this time in the role of the seller?
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$\begingroup$ It's all 1s and 0s for retail traders. I doubt your broker would allow you to take delivery.. at least not without some serious fees. $\endgroup$– BARMar 24, 2016 at 9:01
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Ok you should read some basic product information about futures. When you buy and sell futures, the exchange keeps track of your open position. If you sell some futures you previously bought, you are flat. They see no position against your name.
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$\begingroup$ Thanks. So it's the third alternative I put forward that is correct. In support of this conclusion, here's a quote from Hull's textbook. "The vast majority of futures contracts do not lead to delivery. The reason is that most traders chose to close out their positions prior to the delivery period specified in the contract. Closing out a position means entering into the opposite trade to the original one." -- Options, Futures, and Other Derivatives (9th edition) by John C. Hull, Prentice Hall 2014, pp. 25-26 $\endgroup$– Evan AadMar 24, 2016 at 5:44