P&L is a key indicator for understanding your profit and loss in options trading

P&L is the foundation of trading results analysis. When you place options contracts, you need to understand how your profits and losses move at each stage—from opening a position to closing it or to the contract’s expiration. Different types of P&L are calculated differently depending on the stage of your position and the outcome you aim to achieve.

Bybit supports USDT-based options, so all calculations and payouts are made in this stablecoin. Understanding how each form of P&L works will enable you to make more informed decisions about risk management and optimizing your trading strategies.

Average Entry Price: Understanding Your Actual Entry Point

When you trade actively, it often happens that you increase an existing position by adding new contracts at different prices. This is when calculating the average entry price becomes necessary—it allows you to precisely understand your true position level.

How the average entry price is determined when accumulating positions

The formula is quite simple:

Average position price = [(previous position volume × previous average price) + (new trade volume × new trade price)] / (previous position volume + new trade volume)

Practical example: Suppose a trader bought 0.1 BTC BTCUSDT-31DEC21-48000-C at an entry price of $3,500. Later, confident that BTC’s price will continue rising, he decides to increase his position by buying another 0.1 BTC at $4,000. The calculation: [(0.1 × 3500) + (0.1 × 4000)] / (0.1 + 0.1) = $3,750. Now his average entry price is $3,750, not the initial $3,500 or $4,000.

Unrealized P&L: Your current profit or loss before closing the position

Unrealized P&L (UPL) shows how much you are earning or losing right now while the position remains open. It is an average profit that fluctuates every moment as the market price changes. The formula depends on whether you are buying a call option (bullish position) or selling it (bearish position).

Calculation for buyers of call options and puts

If you believe the asset’s price will rise, you buy a call or sell a put. The formula for unrealized P&L is:

UPL = (marking price − average entry price) × position volume

Example: A trader bought 0.1 BTC BTCUSDT-31DEC21-48000-C at $3,500. The market (marking) price rises to $4,500. His unrealized profit: [(4500 − 3500) × 0.1] = 100 USDT. Although the position is still open, he already sees a potential profit of 100 dollars.

Calculation for sellers of call options and puts

If you expect the price to fall, you sell a call or buy a put. The formula changes:

UPL = (average entry price − marking price) × position volume

Example: A trader sold 0.3 BTC BTCUSDT-31DEC21-50000-C at an average entry price of $2,600. The market price rises to $2,800. Calculation: [(2600 − 2800) × 0.3] = -60 USDT. The market moves against his position, resulting in a loss.

ROI: Return on your investment percentage

ROI (Return on Investment) shows how effectively you are using your capital. It allows comparison between different positions and understanding which ones yield better relative results. The ROI calculation depends on the margin mode you use.

ROI in cross-margin mode

In this mode, ROI is calculated based on the specific position.

For call options: (marking price − average entry price) / average entry price

For put options: (average entry price − marking price) / average entry price

Practical example: A trader bought an option for 0.1 BTC BTCUSDT-23NOV23-36000-C at $4,700. When the marking price reaches $4,900, his unrealized profit is [(4900 − 4700) × 0.1] = 20 USDT. ROI = 20 / 4700 ≈ 0.43%. This indicates his position has increased by 0.43% relative to the initial investment.

If the market moves against the position, ROI would be negative. For example, if the trader sold the option at $4,700 and the marking price rose to $4,900, ROI = -20 / 4700 ≈ -0.43%.

ROI in portfolio margin mode

In this mode, all derivatives on the underlying asset are considered:

ROI = unrealized profit from all derivatives on the underlying / initial margin of the underlying asset

This approach provides a more comprehensive picture, as it accounts for the interaction of all your positions on a specific asset.

Closed P&L: Profit or loss from early position closure

Closed P&L is the actual profit or loss realized when you manually close a position before the contract’s expiration. Unlike unrealized P&L, this figure is final and includes all commissions paid during opening and closing.

Calculation formula for closed P&L

For buyers of call and put options: CLOSED P&L = (trade price at closing − average entry price) × trade volume − trading commissions (opening and closing)

For sellers of call and put options: CLOSED P&L = (average entry price − trade price at closing) × trade volume − trading commissions (opening and closing)

Real trading scenario: The BTC index price is $44,900. A trader sold 0.3 BTC BTCUSDT-31DEC21-50000-C at an average entry price of $2,600. Later, when BTC’s price drops to $44,000, he closes the position at a marking price of $2,400.

Calculating closed P&L: [(2600 − 2400) × 0.3] − (44,900 × 0.3 × 0.03%) − (44,000 × 0.3 × 0.03%) = 60 − 40.41 − 39.6 ≈ -19.99 USDT. Although the position technically closes with a slight profit, commissions reduce the net result.

P&L at contract expiration: final settlement calculation

When the option period ends, a “delivery” or “cash” settlement is performed. This P&L includes not only the price difference but also the premium paid or received, plus delivery commissions.

Calculation for call options at expiration

P&L at delivery (call) = max(delivery price − strike price, 0) × volume − premium − opening commission − delivery commission

Calculation for put options at expiration

P&L at delivery (put) = max(strike price − delivery price, 0) × volume − premium − opening commission − delivery commission

Detailed example: The BTC index price is $44,900. A trader buys 0.1 BTC BTCUSDT-31DEC21-48000-C at an initial entry price of $3,500. At expiration, the delivery price of BTC is $52,000, and the strike price is $48,000.

Step 1. Calculate intrinsic value: max(52,000 − 48,000, 0) × 0.1 = 400 USDT

Step 2. Calculate opening commissions: min(0.03% × 44,900, 12.5% × 3,500) × 0.1 = 1.347 USDT

Note: The trading fee per contract will never exceed 12.5% of the option’s value.

Step 3. Calculate delivery fee (assuming an approximate delivery price of $49,000): min(0.015% × 49,000, 12.5% × (49,000 − 48,000)) × 0.1 = 0.735 USDT

Step 4. Calculate premium paid (as the buyer): 0.1 × 3,500 = 350 USDT

Step 5. Final delivery P&L: 400 − 1.347 − 0.735 − 350 ≈ 47.918 USDT

Realized P&L: your total gains and losses

Realized P&L is the total profit or loss from closed positions. Unlike unrealized P&L, which fluctuates constantly, realized P&L reflects the actual outcome. When a position is reflected in your position profile, the realized P&L shows the cumulative result since you held it.

Formula for realized P&L

REALIZED P&L = sum of profits and losses from closed positions − all trading commissions (opening and closing)

Sequence of calculation in a real scenario

Stage one. Opening a position:

A trader buys 0.4 BTC BTCUSDT-31DEC21-50000-C when the marking price of the option is $2,400, and BTC index trades at $44,000.

Opening commissions = 44,000 × 0.4 × 0.03% = 5.28 USDT

At this stage, the position’s realized P&L is −5.28 USDT (the paid commission).

Stage two. Partial closing of the position:

BTC index price rises to $44,900. The trader closes 0.3 BTC of his position at a marking price of $2,600.

Closing commissions = 44,900 × 0.3 × 0.03% = 4.041 USDT

Profit from closing this part = (2600 − 2400) × 0.3 = 60 USDT

Updated realized P&L = −5.28 + 60 − 4.041 = 50.68 USDT

Stage three. Buying additional contracts:

Now the trader has 0.1 BTC BTCUSDT-31DEC21-50000-C. When BTC index reaches $45,000, he decides to buy another 0.2 BTC of the same contract at a marking price of $2,500.

New purchase commissions = 45,000 × 0.2 × 0.03% = 2.7 USDT

Updated realized P&L = 50.68 − 2.7 = 47.98 USDT

As you can see, realized P&L constantly changes with each new trade, reflecting the cumulative result of all your actions.

Key differences between P&L types

Understanding how different forms of P&L differ is critical for correct interpretation of your results:

Unrealized P&L shows how much you “have” right now, but the figure constantly changes. Closed P&L records the result at the moment of early closure. Realized P&L is the accumulated total of all completed operations. Delivery P&L is calculated by a special method at contract expiration, including the intrinsic value of the option.

For more detailed information on the fee structure for options trading on the platform, refer to the comprehensive options fee guide.