The negative difference between the selling price and initial purchase price of a stock (stocks) in a contra transaction (contra trading). Stocks bought on contra can be sold within a specific period of time, e.g. T+3, (the so-called contra period; transaction day + 3 business days), even if the holder has not settled the purchase price. For example, an investor purchased 2 lots of XYZ stock at a price of $10.00 on Tuesday and intends to sell them on Friday (at T+3). If the investor managed to sell them only for $9.70 on T+3, his loss (gross loss- i.e., before brokerage fees) would be:
Contra loss = selling price – initial purchase price = 9.30 – 10.00 = – $0.30 per share
Contra loss per lot = contra loss per share * 1,000 = -0.30 * 1,000 = -$300
Total loss = – 300 * 2 = – $600
Within the contra period, the investor will not have to pay the initial purchase price, which is, before brokerage fees:
$10 * 1,000 * 2 = $20,000
If brokerage fees were $150, then net loss would be:
Net loss = – 600 – 150 = – $750
