Lot

AAA

DEFINITION of 'Lot'

In general, any group of goods or services making up a transaction. In the financial markets, a lot represents the standardized quantity of a financial instrument as set out by an exchange or similar regulatory body. For exchange-traded securities, a lot may represent the minimum quantity of that security that may be traded.

INVESTOPEDIA EXPLAINS 'Lot'

In terms of stocks, the lot is the number of shares you purchase in one transaction. In terms of options, a lot represents the number of contracts contained in one derivative security.

The concept of lots allows the financial markets to standardize price quotes. For example, equity options are priced such that each contract (or lot) represents exercise rights for 100 underlying shares of common stock. With such standardization, investors always know exactly how many units they are buying with each contract and can easily assess what price per unit they are paying. Without such standardization, valuing and trading options would be needlessly cumbersome and time consuming.

RELATED TERMS
  1. Mini-Lot

    A currency trading lot size that is 1/10 the size of the standard ...
  2. Even Lot

    A normal unit of trading for securities or bonds. An even lot ...
  3. Job Lot

    A futures contract with a minimum trading unit smaller than the ...
  4. Board Lot

    A standardized number of shares defined by a stock exchange as ...
  5. Odd Lot

    An order amount for a security that is less than the normal unit ...
  6. Odd Lot Theory

    A technical analysis theory/indicator based on the assumption ...
Related Articles
  1. Active Trading Fundamentals

    Break Out Of Your Comfort Zone And Win

  2.  These are the two main types of trades that investors will encounter: principal and agent transactions.
    Investing Basics

    Principal Trading and Agency Trading

  3. The 0 and 00 on the roulette wheel were introduced to break the martingale's mechanics by giving the game more than two possible outcomes.
    Forex Education

    Forex Trading The Martingale Way

  4. Taxes

    Using Tax Lots: A Way To Minimize Taxes

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center