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How is buy average calculated for F&O trades?

​When trading the same contract multiple times, we calculate the buy average for F&O positions using the FIFO (First In, First Out) method, regardless of the product type (MIS or Normal) used to close the positions. This consistency is crucial for accurate P&L calculation when filing income tax returns.

​To illustrate the FIFO method, let's take an example:

​Date                   ​
​Symbol                  ​
​  Trade Type ​
​  Qty​
​Rate (₹)​
​18/04/2024​
​NIFTY25APRFUT​
​Buy​
​50 ​
​22100​
​19/04/2024​
​NIFTY25APRFUT​
​ Buy​
​50​
​21900​
​19/04/2024​
NIFTY25APRFUT​
​  Sell ​
​50​
​22150​


In this case, the buy trade on 18/04/2024 becomes the open quantity on 19/04/2024, resulting in an average price of ₹22100 begining of day on 19/04/2024. At End of day on 19/04/2024 the P&L will show a booked profit of ₹2500[(22150-22100)50], and the open position of 50 will have the average price of ₹21900 and the unrealised P&L will reflect the difference between the current market price and ₹21900.

Remember, the FIFO logic applies to both carried forward (Normal) and intra-day (MIS) trades.


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