Lot (Securities Trading)
Candlefocus EditorFor stocks, a round lot is typically 100 share units, but any number of shares can be traded and this is also referred to as lots. Bond lots can vary depending on the face value of a bond, but are usually set to $100,000 or $1 million, though individual investors can purchase bonds with a face value as low as $1,000.
Futures traders can buy or sell as many futures contracts as they like, although the underlying amount that a contract controls is predetermined based on the contract size. For options, one option contract is generally equal to 100 shares of the underlying stock, while forex is traded in micro, mini, and standard lots.
The concept of a lot is essential in the trading of financial securities, as it provides a standard way of measuring the size of a transaction and helps to accurately calculate margin requirements and profits or losses. It is therefore very important for traders to understand the concept of a lot as it applies to their trading instruments, in order to ensure that trades are accurately tracked and reported.