question - what is the (most) correct way to calculate gains on a trade? From the below example (same stock, building a position):
1st purchase: 100,000 shares @ 0.01 for a total of $1000 2nd purchase: 100,000 shares @ 0.03 for a total of $3000 Total cost: $4000 Average cost (price per share): 0.02 for a total of 200,000 shares.
Now, if I sell 100,000 shares @ 0.05, what is my real gain:
1- total proceeds ($5000) - total cost ($4000) = $1000 2- total proceeds ($5000) - cost of 1st purchase ($1000) = $4000 (since the amount of shares sold equals the size of the first parcel purchased) 3- total proceeds ($5000) - average price per share (0.02) x number of shares = $3000
I suppose in the end it doesn't make any difference, you just have more, or less taxable gains in a given FY, depending on when you sell the rest of the position and which option you chose.. but maybe there are rules, and you are not free to chose how to take the gain?
curious to know if anyone knows the answer to this.. cheers!
