| 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:
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 at the beginning of the day on 19/04/2024. At the end of the 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, with the unrealized P&L reflecting 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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