How is buy average calculated for F&O trades?

If the same contract is traded multiple times, the average price of the positions may change. The buy average for F&O positions is calculated using the FIFO (First In, First Out) method, regardless of the product type used to close the positions (MIS or NRML).

Since all trades must use the FIFO method, it's best to use the same method to calculate the P&L when filing income tax returns.

Let’s consider the following trades to understand FIFO:

Date	Symbol	Trade Type	Quantity	Price
10th Sep	BANKNIFTY	Buy	50	22000
11th Sep	BANKNIFTY	Buy	50	22100
12th Sep	BANKNIFTY	Sell	50	22050

In the above case, the buy trade executed on 10th September will be the open quantity at the end of the day; hence, the average price of the open quantity on 12th September will be ₹22100. This logic does not change regardless of the product type used (NRML/MIS) for the trades on 12th September.

The P&L will show a booked profit of ₹2500 [i.e. (22050 - 22000) * 50], and the position will show the difference between the current market price and ₹22100 as the gain/loss for the open position. The same FIFO logic is applicable for both carried forward (NRML) and intra-day (MIS) trades. However, MIS positions can only be exited using MIS product type, and the same goes for NRML. An NRML position cannot be exited using MIS product type and vice versa.