How to Calculate Stock Holding Average Price?

In this article, we will look at the five ways you can calculate the average price of your stock holding through 5 main case scenarios. So, how do you calculate the average price of stock holdings?

The formula that is widely used across the industry is:

Average price = [(Total holding transaction value) + (Net delivery position value)] / [(Total shares from holding transactions) + (Net shares from delivery positions)]

In the above formula, the delivery position is the net buy and sell orders executed for a stock on the trading day.

To understand how to calculate the average price of stock holdings, we will look at five situations:

• Use the First-In-First-Out (FIFO) approach to calculate average prices, removing sold shares from the earliest purchases.
• When buying new shares, recalculate the average price by including both past and new purchases.
• For same-day buys and sells, obtain the average price by finding the difference between the transactions and adjusting for previous holdings.

If you hold 300 shares of XYZ Ltd. and no trades were made today, the average price is based on previous purchases, using the First-In-First-Out (FIFO) method:

Transactions:

• Purchased 100 shares on Jan 15, 2023, at Rs. 150
• Purchased 50 shares on Feb 10, 2023, at Rs. 170
• Purchased 100 shares on Mar 25, 2023, at Rs. 140
• Sold 70 shares on Apr 05, 2023, at Rs. 160
• Purchased 120 shares on May 12, 2023, at Rs. 130

FIFO adjustment: After selling 70 shares, 30 remain from the Jan 15, 2023, lot, leaving the rest intact.

Remaining holdings:

• 30 shares at Rs. 150 = Rs. 4,500
• 50 shares at Rs. 170 = Rs. 8,500
• 100 shares at Rs. 140 = Rs. 14,000
• 120 shares at Rs. 130 = Rs. 15,600

Average price calculation:

• Total value = Rs. 42,600
• Total shares = 300
• Average price = Rs.42,600 / 300 = Rs. 142

If you have no prior holdings and trade today, the average price depends on net buy orders.                                                                                                                                                                   

Transactions:

• Bought 60 shares at Rs. 110 at 10 AM
• Bought 40 shares at Rs. 120 at 12 PM
• Sold 50 shares at Rs. 90 at 2 PM

Net buy calculation:

• Total buy value = (60 × Rs. 110) + (40 × Rs. 120) = Rs. 6,600 + Rs. 4,800 = Rs. 11,400
• Sale value = 50 × Rs. 90 = Rs. 4,500
• Net value = Rs. 11,400 - Rs. 4,500 = Rs. 6,900
• Net shares = 60 + 40 - 50 = 50

Average price calculation:

• Average Price = Rs. 6,900 / 50 = Rs. 138

If you hold 250 shares of XYZ Ltd. and make a new purchase, the average price is a weighted average of previous buys.

Transactions:

• Bought 40 shares at Rs. 120 on Jan 15, 2022
• Bought 60 shares at Rs. 115 on Mar 10, 2022
• Bought 100 shares at Rs. 110 on Jun 25, 2022
• Sold 50 shares at Rs. 125 on Jul 20, 2022
• Bought 100 shares at Rs. 105 on Sep 01, 2022
• Bought 50 shares today at Rs. 108

FIFO adjustment: The 50 shares sold on Jul 20, 2022, come from 40 shares at Rs. 120 (fully used) and 10 shares at Rs. 115 (from the second purchase)

Remaining holdings:

• 50 shares at Rs. 115 = Rs. 5,750
• 100 shares at Rs. 110 = Rs. 11,000
• 100 shares at Rs. 105 = Rs. 10,500
• 50 shares at Rs. 108 = Rs. 5,400

Average price calculation:

• Total value = Rs. 32,650
• Total shares = 300
• Average price = Rs. 32,650 / 300 = Rs. 108.83

If you hold 200 shares of XYZ Ltd. and make a new sale today, the average price adjusts based on past purchases and today’s sale.

Transactions:

• Bought 40 shares at Rs. 120 on Jan 10, 2022
• Bought 60 shares at Rs. 115 on Feb 15, 2022
• Bought 100 shares at Rs. 110 on Mar 20, 2022
• Sold 50 shares at Rs. 130 on Apr 05, 2022
• Bought 50 shares at Rs. 105 on May 10, 2022
• Sold 30 shares today at Rs. 108

FIFO adjustment: After the Apr 5 sale, 40 shares were sold from the Jan 10 lot and 10 from the Feb 15 lot. Today’s sale of 30 shares reduced the Feb 15 lot to 20 shares.

• 20 shares at Rs. 115 = Rs. 2,300
• 100 shares at Rs. 110 = Rs. 11,000
• 50 shares at Rs. 105 = Rs. 5,250

Average price calculation:

• Total value = Rs. 18,550
• Total shares = 170
• Average price =  Rs. 18,550 / 170 = Rs. 109.12

If you hold 200 shares and trade both buys and sells today, the average price adjusts accordingly.

Transactions

• Bought 40 shares at Rs. 120 on Jan 05, 2022
• Bought 60 shares at Rs. 115 on Feb 10, 2022
• Bought 100 shares at Rs. 110 on Mar 15, 2022
• Sold 50 shares at Rs. 130 on Apr 20, 2022
• Bought 50 shares at Rs. 105 on May 05, 2022
• Sold 40 shares today at Rs. 108
• Bought 60 shares today at Rs. 102

FIFO adjustment: Today’s sale depletes the Jan lot of 40 shares.

Remaining holdings:

• 60 shares at Rs. 115 = Rs. 6,900
• 100 shares at Rs. 110 = Rs. 11,000
• 50 shares at Rs. 105 = Rs. 5,250
• 60 shares at Rs. 102 = Rs. 6,120

Average price calculation:

• Total value = Rs. 29,270
• Total shares = 270
• Average price = Rs. 29,270 / 270 = Rs. 108.41

By following FIFO and considering each transaction, these calculations help determine the accurate average price of holdings.