Closing out a ForecastEX contract before it settles at the full value of 1.00 is done using two separate “Closing Offset” transactions with each using a 0.50 USD reference/trade price to equal the total 1.00 USD value of the contract. The Realized P&L for each closing offset line uses the actual cost basis of the lot opened and closed as compared to the 0.50 reference/trade price, then both Closing Offset lines are netted to get the actual Realized P&L.
For example, if a Trader is long 1000 ForecastEX contracts for Event XYZ = 'Yes' at a price of 0.60, and later closes them via 'No' contracts at 0.30, two separate Closing Offset transactions will be reflected on the statement with each using the 0.50 reference/trade price:
- (0.50 - 0.60 paid) * 1000 = (100.00) P&L
- and (0.50 - 0.30 sold) * 1000 = 200.00 P&L
- For a total of 100.00 realized P&L
To see the realized P&L and cost basis for individual lots, you can create an Activity Statement including Lot Details and then click on the “+” alongside a Closing Offset transaction in the Trades section to see the respective cost basis for the lot(s) being closed.
Additional Information
- Closing ForecastEX contracts prior to settlement may be found in this video.
- IBKR Prediction Markets webpage.