Lot (Securities Trading)

A lot is the number of units of a financial instrument that are bought or sold in a single trade. Lot sizes vary by market and instrument: some are standardized by exchanges, while others can be any number of units.

Key takeaways

• In stocks and ETFs, a round lot traditionally equals 100 shares; any quantity not divisible by 100 is an odd or mixed lot.
• One equity option contract typically represents 100 underlying shares (standardization simplifies valuation and trading).
• Futures contracts specify a fixed contract size (for example, many grain contracts are for 5,000 bushels).
• Forex trading uses micro (1,000), mini (10,000), and standard (100,000) lots; the smallest common broker trade size is usually 1,000 units of base currency.
• Bond lot conventions vary by market and issuer; institutional round lots may be $100,000 or $1,000,000, but individual bonds often have face values of $1,000 and can be bought in smaller amounts.

How lots work

Lot size defines how many units are exchanged when you trade. Standardized lot sizes—set by exchanges—improve liquidity and reduce bid-ask spreads because participants trade the same contract sizes. Where lot sizes are not standardized (e.g., direct bond purchases or odd-share stock trades), investors can still buy any permitted number of units, though market mechanics may differ.

Types of lots

Stocks and ETFs

• Round lot: typically 100 shares (or any number divisible by 100, e.g., 300, 1,200).
• Odd lot: fewer than 100 shares.
• Mixed lot: more than 100 shares but not divisible by 100.
  Exchanges historically treated round lots differently, but modern electronic trading makes odd and mixed lots routine.

Bonds

• Institutional round lots are often large (commonly cited figures: $100,000 or $1,000,000), especially in government and corporate debt markets.
• Individual bonds usually have face values of $1,000 (sometimes $5,000, $10,000, or lower), so retail investors can buy smaller amounts; those purchases may be considered odd lots relative to institutional conventions.

Options

• One standard equity option contract represents 100 underlying shares.
• Exercising one call or put affects the lot of 100 shares at the strike price.
• Mini or flex options exist (e.g., contracts representing 10 shares) but are less common.
  Standardization of options contracts makes it straightforward to compute exposure and price per share.

Example: Buying one call option on Bank of America with a strike of $24.50 gives the holder the right to purchase 100 shares at $24.50 each.

Futures

• Futures contracts specify a fixed contract size (the lot).
• Commodity examples: many grain futures contracts cover 5,000 bushels.
• Currency futures examples: 100,000 CAD per contract, 62,500 GBP, 12,500,000 JPY, 125,000 EUR (sizes vary by exchange and contract).
  Futures are standardized and non-negotiable on exchanges; forward contracts, by contrast, can be customized between parties.

Forex

• Standard lot = 100,000 units of base currency.
• Mini lot = 10,000 units.
• Micro lot = 1,000 units.
  Brokers often allow trading in increments of 1,000 units. Example: 1,451,000 units can be traded as 14 standard lots (1,400,000), 5 mini lots (50,000), and 1 micro lot (1,000).

Why lot size matters

• Standardized lots increase market liquidity and make pricing and hedging more efficient.
• For leveraged and derivative products, knowing the contract lot clarifies total exposure and margin requirements.
• For retail investors, odd or small lots may affect execution quality or incur different fees, depending on broker and market structure.

Bottom line

A lot defines the quantity of an instrument tied to a trade or contract. Understanding lot sizes is essential for measuring exposure, computing per-unit cost, and managing risk—especially in derivative and futures markets where contract sizes are fixed. In cash markets (stocks, bonds, ETFs), investors typically can trade nonstandard quantities, but the implications for liquidity and execution can vary.