Profit or loss on any trade that has not been cashed out or settled yet is referred to as Unrealised PnL (Profit and Loss). These are fluctuating amounts and will remain so unless the trade is settled.
Unrealized Profit or Loss is the potential profit or loss that you can make, however, there is no actual cash inflow or outflow. Unrealized PNL is often also known as Floating PnL or Fluctuating PnL.
The formula for calculating Unrealised PnL is as follows:
Unrealized PnL (Long options) = (Market Price – Open Price) x Minimum lot size x No of lots
Unrealized PnL (Short options) = (Open Price- Market Price) x Minimum lot size x No of lots
Open Price is the Price at which the trade was entered into
Take the following example, Ben enters into a long position for ETH at USD 2,000. The minimum lot size is 0.5 ETH. He purchases one lot size. If the latest price of ETH is USD 2,500, then the Unrealised Gain is USD 250 i.e. (2500-2000) x 0.5 x 1
Also if Carol enters into a short position for BTC at USD 18,000 as she estimates a fall in its price. She purchases sell options of 2 lots (0.5 BTC for each lot). Accordingly, if BTC falls to USD 17,000, her Unrealised Gain will be USD 1,000 i.e. (18,000 – 17,000) x 0.5 x 2
The only difference between Unrealised and Realised profit or loss is that realized profit or loss is calculated when the positions are actually settled. It is important to note that generally taxes are levied only on realized PnL.
Once you enter into a position, you will also be able to view your Unrealised PnL on the position by viewing the Assets Tab below the candlestick chart.