Does taking multiple trades on same stock change booked P/L even if squared off after each trade?


#1

Lets say stock ABC is trading at Rs 100/-, (CMP) and bearish.

I go short and when the price reaches 90/-, i decide to square off and get profit of Rs 10/-

Booked P/L = Rs 10.

Now, lets say the stock price retraces up, and reaches 95/- (CMP), and starts going down again, and i go short again at 95/- now.

Question:

  1. When i go short again at a higher CMP, than the previous squared-off value, does it change my booked P/L?
    (Asking this, as i have seen the booked P/L comes to the current MTM, when i re-take trade). Like the booked P/L of Rs +10/- becomes current MTM at Rs +5/- (100 - 95)

  2. Now, suppose the stock from CMP 95/- goes to suppose 85/-. after 30 mins and i re-square off.
    Is my booked P/L equals 10 + 10 = 20 for two trades? OR is it just Rs 15 (initial 100/- to final 85 since the overall initial and final prices are taken).

If (2) is the answer, then why is it so? Because the previous transaction is already squared-off.


#2

What you will see is would be the average buy value and average sell value. Your P&L would be difference between the two multiplied by the number of lots (or shares). [quote=“kingsmasher1, post:1, topic:14848”]
Now, suppose the stock from CMP 95/- goes to suppose 85/-. after 30 mins and i re-square off.
Is my booked P/L equals 10 + 10 = 20 for two trades? OR is it just Rs 15 (initial 100/- to final 85 since the overall initial and final prices are taken).
[/quote]

Assuming you’ve done two trades - 1st short at 100 and 2nd short at 95, then your avg short would be 97.5. You are squaring off the first short at 90 and the 2nd at 85, so your avg square off would be 87.5. Hence your total profit would be the difference between avg short and avg sq off value which is 10.


#3

Thanks Karthik for the explanation.


#4

@Karthik So while calculating the STT taxes, is it also the average price which is considered? Or is it per order executed separately for each one?