How is buy average calculated for F&O trades?

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:

DateBuy/SellLot SizeLotsRateValue
Jan 5thBuy154₹185₹11,100
Jan 12thBuy156₹210₹18,900
Total10Avg: 200₹30000

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

DateBuy/SellLot sizeLotsRateValue
Jan 20thBuy152₹235₹7,050
Jan 20thSell153₹240₹10,800

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: 

DateBuy/SellLot SizeLotsRateValue**
Jan 5thBuy151 (4-3)₹185₹2,775
Jan 12thBuy156₹210₹18,900
Jan 20thBuy152₹235₹7,050
Total9Avg: ₹212.78₹28,725

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.