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Lot

Lot

What is a lot?

A lot is a term used to describe the standardized number of units of a traded asset.

How does a lot work?

Market players use lots for purchasing and selling financial instruments. Traditionally for the stock market, 100 shares comprise one lot (a round lot). In fact, round lots can have numbers of shares that can be divided by 100.

However, there are also odd lots and mixed lots. Odd lots have less than 100 shares, and mixed lots have more than 100 shares, but whatever number it is, it cannot be divided by 100.

When trading, an individual can choose a lot size they can offer since buying one full lot can sometimes get too expensive. For instance, a stock lot equals 100 shares. Such a lot is called a round lot. But you don’t have to purchase the whole round lot. Instead, you can buy any number of shares from that lot going for 0.5 lot, 0.1 lot, or even 0.01 lot.

More information on lots is available in this video lesson by the FBS analyst team.

Types of lots

Bond market lots

Dominated by institutional investors, the bond allows them to buy debt from bond issuers in large sums. Typically, a lot size for the bond market is $1 million; however, there can also be $100 000 lots.

Options contracts lots

As for options contracts, one option lot equals 100 shares. This type of standardization lets investors know the exact number of units they are buying with each contract. Without such standardization, trading options would be a much harder task.  

Futures market lots

In the futures market, lots are called contract sizes. Anything can go as an asset for a futures contract: equity, a bond, interest rates, commodity, index, currency, etc. For that very reason, the contract size will vary according to the type of traded contract.

Unlike stocks or bonds, the standard futures and options lot size is fixed and non-negotiable. But the thing is that those involved in trading forward contracts can customize the lot size of traded contracts because those are non-standardized contracts created by the parties involved.

Forex lots

Forex lots are divided into three lot sizes: micro, mini, and standard. A micro lot in Forex is 1 000 of the base currency; a mini lot contains 10 000; a standard lot is 100 000. When trading currencies via the Forex market, the smallest trade size will be 1 000.

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2022-06-07 • Updated

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