For traders, it’s important to know how to calculate profit and loss before placing an order. Bybit Kazakhstan supports USDT Options and USDC Options. P&L for USDT Options will be settled in USDT while P&L for USDC Options will be settled in USDC.
Here’s a guide to help you better understand the relationship between different variables and profit & loss calculations. The calculation below will use USDT Options as an illustration.
Average Entry Price
When traders place new orders for the existing Options contract, the entry price will change accordingly.
Formula
Position Average Price = [(Last Position Quantity × Last Position Average Price) + (Traded Quantity × Traded Price)]/(Last Position Quantity + Traded Quantity)
Example
Ann holds a 0.1 BTC of BTCUSDT-31DEC21-48000-C, with an entry price of $3,500. She believes that the price of BTC will continue to rise in the near future. Ann decides to increase her call options, and opens a new call option of 0.1 BTC at the entry price of $4,000.
Average Entry Price = [(0.1 × 3,500) + (0.1 × 4,000)]/(0.1 + 0.1) = $3,750
Unrealized P&L
Unrealized P&L (UPL) is the current profit or loss of open positions. Based on the direction of your position — long or short — the formula used to calculate the unrealized profit and loss will be different.
ROI
ROI shows the percentage return on investment for each position.
Closed P&L
Closed P&L is the profit and loss that occurs when the trader closes the position.
Formula
Closed P&L for Buy Call/ Put = (Traded Price − Position Average Price) × Traded Quantity − Trading Fees (open and closed position)
Closed P&L for Sell Call/ Put = (Position Average Price − Traded Price) × Traded Quantity − Trading Fees (open and closed position)
Example
Sell Call: The BTC index price is $44,900. Bob sells a 0.3 of BTC BTCUSDT-31DEC21-50000-C, with an average entry price of $2,600. When the price of BTC drops to $44,000, he closes the position early at a mark price of $2,400.
The Closed P&L of the option is 52 USDT, based on the following calculation:
[(2,600 − 2,400) × 0.3] − 44,900 × 0.3 × 0.03% − 44,000 × 0.3 × 0.03%.
Delivery P&L
This is generated when the Option expires.
Formula
Delivered RPL for Call Option = Maximum (Delivery Price − Strike Price, 0) × Position Quantity + Premium (receive or pay) − Delivery Fee − Trading Fee (open position)
Delivered RPL for Put Option = Maximum (Strike Price − Delivery Price, 0) × Position Quantity + Premium (receive or pay) − Delivery Fee − Trading Fee (open position)
Example
Buy Call:
The BTC index price is $44,900. Ann buys a 0.1 of BTC BTCUSDT-31DEC21-48000-C, with an entry price of $3,500. When the contract expires, the BTC delivery price is $52,000. It’s traded at a strike price of $48,000. The delivery P&L of the option is 47.873 USDT, based on the following calculation:
Maximum (52,000 − 48,000, 0) × 0.1 − 3,500 × 0.1 − 44,900 × 0.1 × 0.03% − 52,000 × 0.1 × 0.015%
Let’s revisit Ann’s case, in which the BTC index price is $44,900. Ann holds a 0.1 of BTC BTCUSDT-31DEC21-48000-C, with an entry price of $3,500. The delivery P&L of the option is 400 USDT.
- Trading Fee = Minimum (0.03% × 44,900, 12.5% × 3,500) × 0.1 = 1.347 USDT
Note: Trading fee for a single contract can never be higher than 12.5% of the option price.
Let’s suppose that the estimated delivery price is $49,000 when the contract is about to expire.
- Delivery Fee = Minimum [(0.015% × 49,000, 12.5% × (49,000 − 48,000)] × 0.1= 0.735 USDT
As an option buyer, Ann needs to pay a premium to the seller to obtain the right to the call option.
Formula:
Premium = Traded Quantity × Traded Price
- 0.1 × 3,500 = 350 USDT
Delivery P&L = 400 − 1.347 − 0.735 − 350 = 47.918 USDT
Closed P&L and Delivery P&L are different from Unrealized P&L and Realized P&L. It’s worth noting that Delivery P&L also takes premium into account. Please refer to the following table for details:
Realized P&L
Realized P&L is the profit and loss that occurs when the trader closes the position early. Please note that the Realized P&L in the position zone represents the total profit and loss of the position since the position has been held.
Formula
Realized P&L = Sum (Profit and loss on closed positions) − Trading Fees (open and closed positions)
Example
Let's see how the Realized P&L displayed in the position zone changes in different scenarios.
Scenario 1: Bob buys 0.4 of BTC BTCUSDT-31DEC21-50000-C when the Option mark price is $2,400 and the BTC index price is $44,000.
Trading Fee (open position) = 44,000 × 0.4 × 0.03% = 5.28 USDT
In this case, the Realized P&L of Bob's position is −5.28 USDT.
Scenario 2: The BTC index price rises to $44,900. Bob sells a 0.3 of BTC BTCUSDT-31DEC21-50000-C, with an average entry price of $2,400. He closes the position at a mark price of $2,600.
Realized P&L (before) = - 5.28 USDT
Trading Fee (closed position) = 44,900 × 0.3 × 0.03% = 4.041 USDT
Realized P&L = [(2,600 − 2,400) × 0.3] − 44,900 × 0.3 × 0.03% - 5.28 = 50.68 USDT
Scenario 3: Now Bob only holds 0.1 BTC of BTCUSDT-31DEC21-50000-C. Then, when the BTC index price is $45,000, he buys 0.2 BTC of BTCUSDT-31DEC21-50000-C at $2,500.
Realized P&L (before) = 50.68 USDT
Trading Fee (open position) = 45,000 × 0.2 × 0.03% = 2.7 USDT
Realized P&L (before) = 50.68 − 2.7 = 47.98 USDT
For more detailed information about option fees, please refer to Bybit Kazakhstan Option Fees Explained.