How does the profit and loss recognized on execution of square up (cover) orders?
Execution price of cover order is compared against the weighted average price at which the position was built up (as shown in the “margin Position” table) and profit/loss is calculated therefrom. For example, say you have a margin position – ‘Buy 100 Reliance Shares’ at an average price of Rs. 100 per share created through the execution of 2 orders – ‘Buy 50 Reliance Shares @ Rs. 110 per share’ and ‘Buy 50 Reliance Shares @ Rs. 90 per share’. If you square off a part of the position by selling 60 Reliance Shares @ Rs.
Execution price of cover order is compared against the weighted average price at which the position was built up / previous trading day EOD MTM price (as shown in the “Open Positions” table) and profit/loss is calculated therefrom. For example, say you have a futures position – Buy 20 MT in contract NCD-FUT-RBRRS4KTM-20-Jan-2006 at an average price of Rs. 6469 per quintal created through the execution of two orders – Buy 10 MT @ Rs. 6470 per quintal and Buy 10 MT @ Rs. 6468 per quintal. Multiplier for Rubber is 10. If you square off a part of the position by selling 10 MT RBRRS4KTM @ Rs.
Execution price of cover order is compared against the weighted average price at which the position was built up / previous trading day EOD MTM price (as shown in the “Open Positions – Futures” table) and profit/loss is calculated therefrom. For example, say you have a futures position – ‘Buy 200 Reliance Shares’ in contract Futures – ACC- 27 Feb 2002 at an average price of Rs. 300 per share created through the execution of two orders – ‘Buy 100 @ Rs. 310 per share’ and ‘Buy 100 @ Rs. 290 per share’. If you square off a part of the position by selling 50 Reliance Shares @ Rs.
