How is my average rate calculated for F&O?

First In First Out (FIFO) is a method used while calculating the average rate for trades in equity, commodity, and currency derivatives

Under this method, securities purchased first are sold first.

For example, Mr Raj has traded in BANKNIFTY options as given below:

Jan 1stBuy5Rs. 200Rs. 25,000
Jan 10thBuy5Rs. 220Rs. 27,500
 Avg: Rs. 210

((52,500 / 25) / 10)
Rs. 52,500

  • On Jan 14th, he buys 1 lot at Rs. 240 per lot and sells 2 lots at Rs. 250 per lot:

Jan 14thBuy1Rs. 240Rs. 6,000
Jan 14thSell2Rs. 250Rs. 12,500

  • Based on the FIFO principle, the 2 lots sold will be taken from the 5 purchased on Jan 1st. 
  • The P&L for the Period Statement will show a booked profit of Rs. 2,500 ((250-200)*2*25)
  • The new average rate is calculated as:

Jan 1stBuy3 (5-2)Rs. 200Rs. 15,000
Jan 10th Buy
5Rs. 220
Rs. 27,500
Jan 14th
1Rs. 240
Rs. 6,000

 Avg: Rs. 215.5

((48,500 / 25) / 9) 
Rs. 48,500

* For F&O trades, the FIFO principle is applicable to the average rate calculation for both carry forward and intraday positions.

* During the day, the weighted average rate is displayed for intraday positions. The FIFO-based average rate is updated on our trading platforms at the end of the day.

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