The buy average for F&O positions is determined using the FIFO (First In, First Out) method if the same contract is traded multiple times. It operates on the principle that the first securities purchased are the first ones to be sold. To better understand FIFO, let’s look at an example with the following trades:

Mr. Ajay engages in BANKNIFTY options where lot size is 15 and the trades are as follows:

On Jan 20th, he buys 2 lots at ₹ 235 per lot and sells 3 lots at ₹ 240 per lot:

Applying FIFO, the 3 lots sold are considered from those purchased on Jan 5th.

P&L Booked profit = ₹ 2475 ((240-185) * 3 * 15)

New average rate will be: 

Note:

• FIFO applies to average rate calculations for both carry forward and F&O trades.
• During the day, intraday positions display a weighted average rate.
• The FIFO-based average rate is updated on trading platforms at the end of the day.