Options P&L Calculations on Pi42

Pi42 settles USDT options contracts in INR. Understanding how your average entry price and P&L are calculated is crucial for tracking your trading performance. Here’s how each component works

1. Calculating Average Entry Price

When you increase your position in an option, your average entry price updates as follows:

Formula: Average Entry Price = [(Prev Qty × Prev Avg Price) + (New Qty × New Trade Price)] / (Prev Qty + New Qty)

Example:

• Initial: 0.1 BTC at $3,500

• Additional: 0.1 BTC at $4,000

• New Average = [(0.1 × $3,500) + (0.1 × $4,000)] / (0.1 + 0.1) = $3,750
  

2. Unrealized P&L (UPL)

Unrealized P&L shows the current profit or loss for open option positions, calculated using the current Mark Price.

Note: UPL changes with the market price and does not include trading fees, delivery fees, or premiums.

3. ROI (Return on Investment)

ROI measures the percentage return on your position.

Cross Margin Mode:

Portfolio Margin Mode:

• ROI = (Unrealized P&L of Derivatives on Underlying Assets) / (Initial Margin of Underlying Assets)
  

Delivery ROI:

• Buy Option: (Delivery Cash Flow − Avg Entry Price × Qty − Fees) / (Avg Entry Price × Qty)
  
  

• Sell Option: (Delivery Cash Flow + Avg Entry Price × Qty − Fees) / (Avg Entry Price × Qty)
  

4. Closed P&L

Profit or loss realized when you close a position.

Example (Sell Call):

• Entry Price: $2,600, Close Price: $2,400, Qty: 0.3

• Fees: 0.03% of both open & close index prices

• Closed P&L = [(2,600 − 2,400) × 0.3] − 44,900 × 0.3 × 0.03% − 44,000 × 0.3 × 0.03%

5. Delivery P&L
When the contract expires, Delivery P&L is calculated as:

• Call Option: Delivery P&L = max(Delivery Price − Strike Price, 0) × Qty + Premium (paid/received) − Delivery Fee − Trading Fee
  
  

• Put Option: Delivery P&L = max(Strike Price − Delivery Price, 0) × Qty + Premium (paid/received) − Delivery Fee − Trading Fee
  

Example (Buy Call):

• Strike: $48,000, Delivery Price: $52,000, Qty: 0.1, Entry: $3,500

• Delivery P&L = [($52,000 − $48,000) × 0.1] − (3,500 × 0.1) − Fees
  

6. Trading & Delivery Fees

• Trading Fee: Minimum of (0.03% × Index Price) OR (12.5% × Option Price), per trade
  
  

• Delivery Fee: Minimum of (0.015% × Delivery Price) OR (12.5% × (Delivery Price − Strike)), per contract

Note: The trading fee per contract is capped at 12.5% of the option price.

7. Premiums

For option buyers, premium = Qty × Trade Price, paid up front. Sellers receive the premium.

8. Realized P&L

The total P&L from all closed trades, minus trading fees.

Formula: Realized P&L = Sum (Profit/Loss on closed positions) − Trading Fees

Summary Table: P&L Types

Examples & Scenarios

Scenario 1: Opening a Position

• Bob buys 0.4 BTC of a Call Option at $2,400 (BTC Index: $44,000)

• Trading Fee = $44,000 × 0.4 × 0.03% = 5.28 USDT

• Realized P&L after opening: −5.28 USDT (just the fee)
  

Scenario 2: Closing a Position

• Sells 0.3 BTC at $2,600 (BTC Index: $44,900)

• Trading Fee (close) = $44,900 × 0.3 × 0.03% = 4.041 USDT

• Closed P&L = [(2,600 − 2,400) × 0.3] − 4.041 − 5.28 = 50.68 USDT
  

Scenario 3: Adding to a Position

• Buys 0.2 BTC at $2,500 (BTC Index: $45,000)

• Trading Fee = $45,000 × 0.2 × 0.03% = 2.7 USDT

• Realized P&L updates accordingly
  

Key Points

• Average Entry Price updates each time you increase your position.

• Unrealized P&L tracks current open position gains/losses based on market price.

• Closed P&L and Delivery P&L reflect profits or losses after closing or at expiry, including all fees and premiums.=

• Always review fees and margin requirements before trading.