Calculation of Expiry Futures Contracts' Profit and Loss

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Understanding how profit and loss (PnL) is calculated in expiry futures contracts is essential for traders aiming to manage risk, assess performance, and make informed trading decisions. Whether you're trading coin-margined or U-stablecoin-margined futures, the formulas differ slightly based on margin type, position direction, and contract specifications. This guide breaks down each component of PnL calculation with clear explanations, practical examples, and actionable insights.

Key Concepts in Futures Trading

Before diving into formulas, it's important to define the core terms used in futures PnL calculations:

These elements feed into various types of PnL: floating (unrealized), closed (realized), settlement, and overall realized PnL.

👉 Learn how futures pricing works in real-time market conditions.

How Entry Price Is Calculated

The entry price reflects the weighted average cost of your open position. It updates whenever you add to or reverse a position.

For U-Stablecoin-Margined Contracts

Formula:

Entry Price = (Current Size × Current Entry Price + Added Size × New Entry Price) / (Current Size + Added Size)

Example:
You hold a long BTC-USDT expiry futures position of 10 contracts at an entry price of $100,000. You add 5 more contracts at $160,000.

= (10 × 100,000 + 5 × 160,000) / (10 + 5)  
= (1,000,000 + 800,000) / 15  
= $120,000

Your new average entry price becomes $120,000.

For Coin-Margined Contracts

Formula:

Entry Price = (Current Size + Added Size) / (Current Size / Entry Price + Added Size / New Entry Price)

Example:
You hold a short BTC-USD futures position of 10 contracts at $100,000. You add 5 more at $80,000.

= (10 + 5) / (10 / 100,000 + 5 / 80,000)  
= 15 / (0.0001 + 0.0000625)  
= 15 / 0.0001625 ≈ $92,307

Your updated entry price is approximately $92,307.

Floating Profit and Loss (Unrealized PnL)

Floating PnL shows your current gain or loss based on the mark price, before the position is closed.

U-Stablecoin-Margined Contracts

Example:
Long 10 BTC-USDT contracts (face value: 0.01 BTC), entry at $100,000, mark price at $160,000.

= 0.01 × 10 × 1 × (160,000 – 100,000)  
= 6,000 USDT profit

Coin-Margined Contracts

Example:
Short 1,000 BTC-USD contracts (face value: $100), entry at $100,000, mark price at $80,000.

= 100 × 1,000 × 1 × (1/80,000 – 1/100,000)  
= 100,000 × (0.0000125 – 0.00001)  
= 100,000 × 0.0000025 = 0.25 BTC profit

👉 See how real-time mark prices affect your open positions.

Floating PnL Ratio

This metric expresses unrealized profit or loss as a percentage of the margin allocated to the position.

Formula:
(Floating PnL / Position Margin) × 100%

Example:
A long BTC-USDT position has a floating PnL of 6,000 USDT and uses 1,600 USDT as margin.

= (6,000 / 1,600) × 100% = 375%

A ratio above 100% indicates strong profitability relative to capital at risk—valuable for evaluating efficiency and leverage use.

Closed PnL (Realized from Closing)

Closed PnL reflects gains or losses locked in when you partially or fully close a position.

U-Stablecoin-Margined Contracts

Coin-Margined Contracts

This value becomes part of your realized PnL once the trade is executed.

Settlement PnL

At contract expiry, unsettled positions are marked to the final settlement price. Any difference between entry and settlement price results in Settlement PnL.

Formulas mirror Closed PnL but substitute "Close Price" with "Settlement Price."

Settlement applies automatically and finalizes all remaining unrealized PnL for expiring contracts.

Realized PnL and Ratio

Realized PnL includes:

Formula:
Realized PnL = Closed PnL + Settlement PnL – Trading Fees

Realized PnL Ratio:
(Realized PnL / Closed Position’s Margin) × 100%

This ratio helps assess return on capital for completed trades.

Frequently Asked Questions

Q: What is the difference between floating and realized PnL?
A: Floating PnL is unrealized and changes with market prices. Realized PnL is locked in after closing or settling a position.

Q: Why do coin-margined and U-margined contracts use different formulas?
A: Coin-margined contracts settle in the base asset (e.g., BTC), so inverse pricing (using 1/price) ensures consistent value calculation. U-margined contracts use stablecoins and direct linear pricing.

Q: Does adding to a position always improve my entry price?
A: Not necessarily. It depends on whether the new fill price is better than your current average. A higher price worsens a long entry; a lower price worsens a short entry.

Q: How are trading fees factored into PnL?
A: Fees are deducted from realized PnL. Both taker and maker fees apply based on order type and execution.

Q: Can I have negative realized PnL even if my floating PnL looked positive?
A: Yes—market movement after closing, funding costs, or high fees can reduce or eliminate earlier gains.

Q: Is Settlement PnL taxable?
A: Tax treatment varies by jurisdiction. Settlement triggers a taxable event in many regions since it represents final profit or loss realization.

👉 Access advanced tools to track your realized and unrealized PnL across all futures products.

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This guide provides a comprehensive overview of how expiry futures contracts calculate profit and loss across different margin types and trading modes. By understanding these mechanics, traders can better evaluate performance, optimize entries and exits, and manage risk effectively in volatile markets. Always remember that futures trading involves significant risk—especially with leverage—and should be approached with proper education and caution.