What is the method to calculate the Buy Average for F&O trades?

When you trade the same Futures & Options (F&O) contract multiple times, the buy average is calculated using the FIFO (First In, First Out) method. This applies regardless of the product type (MIS or NRML).

Key Points:

• FIFO means the first securities purchased are the first ones to be sold.
• It’s advisable to use FIFO when filing taxes. Discuss with your financial consultant before using any other method.

Example (Using FIFO):

Here’s how FIFO applies:

• The Sell on 14th Sep will be matched with the first Buy on 12th Sep (at ₹2,400).
• Profit booked = (2,410 – 2,400) × 100 = ₹1,000.
• The open position now is the Buy at ₹2,420 from 13th Sep.
• So, the buy average for the remaining position is ₹2,420.

Additional Notes:

1.FIFO applies to both NRML (carry forward) and MIS (intraday) trades.

2. However, you must exit a position using the same product type:

• MIS positions → exit with MIS.
• NRML positions → exit with NRML.

(You cannot close an NRML position using MIS, or vice versa.)