Stock trades and realized gains/losses

Derek Atkins warlord@MIT.EDU
10 Jan 2003 00:57:00 -0500


Neil Jerram <neil@ossau.uklinux.net> writes:

> >>>>> "Derek" == Derek Atkins <warlord@MIT.EDU> writes:
> 
>     Derek> Now, let me show you how this looks from the LOT view.  In paricular
>     Derek> the Lot view has the following splits:
> 
>     Derek> (type)	amt	val	(amt-bal)       (val-bal)
>     Derek> buy          10      $100	10              $100
>     Derek> sell         -5     -$150    5               -$50
>     Derek> (gain)        0      $100    5		$50
> 
>     Derek> The (new) invariant of a Lot is that it is "closed" when both the
>     Derek> sum-of-amount _AND_ sum-of-value is zero.  That way you know it is
>     Derek> closed when you've accounted for all the shares _AND_ all the
>     Derek> gain/loss.
> 
> So how would one close the Lot just above?  (I mean, wouldn't it need
> another gain-like split that would cancel out the one that's there
> already?)

Well, the above lot is not closed, because you've only sold 5 of the
10 shares.  You would need yet another "sell" split (and most likely
another gain/loss split) in order to close the lot.  The lot is
consdered "closed" with the amount-balance AND the value balance is
zero.  Those balances are computed as the sum of all amounts (and sum
of all values).

The point of my example is that you may need multiple sales in
order to sell all the shares of a lot.  The reverse is true -- you
may also sell the shares of multiple lots at once.  However, I think
that's a lot easier to think about.

>         Neil

-derek

-- 
       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
       Member, MIT Student Information Processing Board  (SIPB)
       URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
       warlord@MIT.EDU                        PGP key available