Unpricing is a new feature on the pricing dialog on the risk tab of To-be-fixed contracts. When you have previously agreed with your counterpart to price some lots against a market price, this new feature allows you to un-price them against the current market price.
As the unpricing is done against a different market price than the pricing, the result of the unpricing will be included in the calculation of the price. The individual impact of each unpricing will be displayed as a premium adjustment - the result over the unpricing distributed over the entire pricing.
Simple example:
A sales contract to be fixed with 10 lots + a premium of 50:
| • | you price 3 lots by buying them for 400 + 50 = 450 |
| • | you un-price all 3 by selling them for 410 + 50 = 460 |
| o | individual effect of unpricing result = 3 x (400 – 410) / 10 = -3 |
| • | next you price all 10 lots for 405 + 50 = 455 |
Your overall price will be (3 x 400 – 3 x 410 + 10 x 405)/10 + 50 = 452
(Which can also be seen as the 455 from the last pricing plus the premium adjustment of -3)