New Choice FinX Feature – Options Average

Quite often, we buy or sell the same option (strike price) multiple times. It can be cumbersome to read through all the transactions. This is where the Options Averaging comes in handy.

Typically, average is an important figure in the financial markets, not only to know how one has fared today but also for assessment. Quite often, the market hovers around the same strike price so we day traders usually find themselves trading the same options.

With the Option Average Price Display, no matter how many times you’ve bought or sold the same option, it will dynamically keep showing the current average price of your options holdings.

What happens when you sell?

For selling (same option) let’s say you’ve 3 lots as per the table below,

*Nifty Lot size – 75

So the calculation will go something like this, Rs 1500 i.e (75*1400) + (75*1500) + (75*1700) / (150+75-75+75) and that how we’ll arrive at the average for options.

When you decide to sell off one of them, so you just have to enter the quantity of lots you’d like to sell. This is where the FIFO method will come into play.

FIFO – First In, First Out

Quite popular in the market FIFO, and LIFO (Last In, First Out) the system will automatically sell the first lot that was purchased. Now the average price may or may not change depending on the bid price.

Benefits of Options Average

• Directly see the average purchase price of same option
• System automatically sells via FIFO
• With delivery, understanding P&L is easier

With the Option Price Average Display, when you take delivery of a particular option, P&L interpretation becomes a lot easier. Armed with the average price you can time your exits accurately. Options Average Price Display is now live on Choice FinX; check it out to see how your trades are easier and referring P&L statements quicker!