Odd Lot

An odd lot is a securities order composed of fewer shares than the market’s standard trading unit — typically any quantity under 100 shares for U.S. stocks. Odd lots arise from corporate actions or investor behavior and can affect execution, visibility in market data, and transaction costs.

Key points

• Odd lot = fewer than 100 shares (commonly 1–99 shares).
• Round lot = a quantity divisible by 100 (e.g., 100, 300).
• Mixed lot = more than 100 shares but not divisible by 100 (e.g., 147, 2,999).
• Odd-lot trades historically faced higher per-share costs and less visible market reporting; online brokers have reduced many of those frictions.

How odd lots form

Common causes:
* Corporate actions — reverse stock splits can turn round lots into odd lots (e.g., a 1-for-8 reverse split turns 200 shares into 25).
* Dividend reinvestment plans — fractional share credits can create balances under 100.
* Partial purchases or sales — investors who buy or sell without rounding to 100-share increments.

Odd lots vs. round lots vs. mixed lots

• Round lots: quantities that are multiples of 100. These are standard for most exchanges and are fully reflected in exchange bid/ask data.
• Odd lots: quantities less than 100. They are often not displayed in consolidated bid/ask feeds and may not appear on some public execution tapes.
• Mixed lots: contain at least one round-lot portion and an odd-lot remainder. Reporting typically shows only the round-lot portion (e.g., a 147-share order may report as 100 shares).

Because odd-lot trades are nonstandard, they sometimes take longer to execute and may be routed differently than round-lot orders.

How companies handle odd lots

Firms and issuers may take steps to eliminate small odd holdings:
* Buyouts — purchasing residual odd holdings for cash, sometimes at a premium.
* Share grants — issuing extra shares to bring a shareholder up to a round lot.
* Reverse splits or cash-outs — designing a corporate action so odd holdings convert into cash or disappear.

These measures simplify shareholder records and reduce administrative costs for the company.

Practical implications for investors

• Costs: Some brokers historically charged higher per-order minimums for small trades; many online brokers now offer low or zero commissions, but minimum-fee structures vary.
• Execution and liquidity: Odd-lot orders can be slower and less transparent in market data; consider aggregating to a round lot if speed and visibility matter.
• Strategy: If you frequently end up with odd lots from DRIPs or corporate actions, you can:
• Buy additional shares to reach a 100-share round lot,
• Sell odd lots via your broker (watch for fees), or
• Accept occasional small holdings if the cost of consolidation exceeds their value.

Conclusion

Odd lots are nonstandard share quantities that can result from corporate actions or fractional trading activity. They carry potential trade-cost and execution implications, though modern brokerage practices have reduced many disadvantages. Investors should be aware of how odd lots affect reporting and execution and choose whether to consolidate, sell, or retain these holdings based on costs and personal trading goals.