Apple Final Cut Pro 5 - Manual (Page 508)

Chapter 10 Three-Point Editing 173
II
3 In the Timeline, move the playhead to the point in your edited sequence where you
want your clip to end, and set an Out point.
4 If you do an overwrite edit, you’ll see that your clip has been edited into the sequence
so that the Out point of your clip lines up with the Out point you specified in the
Timeline. The rest of your clip has overwritten any material to the left of the Out point
for the duration defined by the In and Out points set in the Viewer.
Set an edit point at the
location where you want
the clip to end.
The new clip lines up
with the Out point you
specified in the Timeline.