How is a contract closed out?

How is a contract closed out?

Involves entering into an opposite position.

Example:

-Company S initially enters into a sell 1 10y Tbond contract with company B
-Company S would close out by entering into a buy 1 10yr Tbond contract for delivery on the same date with company R
-the second contract reverses the first contract and company S would not longer have an open position in the futures market