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Calculation of turnover in option trading

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3 Points Posted on 23 July 2024
how to calculate turnover in option trading in case of loss
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On 23 July 2024 at 15:05 Report
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Master in Accounts & high court Advocate
9615 Points Posted on 23 July 2024
  1. Determine the total premium received: Add up the total premium received from selling options,
  2. Determine the total premium paid: Add up the total premium paid for buying options.
  3. Calculate the net premium: Subtract the total premium paid from the total premium received. 
  4. Add the net premium to the notional value of the options traded: Multiply the number of contracts by the strike price and add the net premium.
  5. Consider the loss: If the net result is a loss, use the absolute value of the loss as the turnover. 
  6. Formula: Turnover = (Total premium received -total premium paid)+ (Notional value of options traded)
  7. Example: 
  8. Total premium received: Rs.1,00,000
  9. Total premium paid : Rs.1,20,000
  10. Notional value of options traded: Rs.5,00,000(10 contracts x Rs.50,000 strike price)
  11. Net Premium = Rs.20,000(Rs.1,00,000-Rs.1,20,000)
  12. Turnover: Rs.5,20,000 (Rs.20,000) + Rs.5,00,000
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On 23 July 2024 at 15:55


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