What It Means
Lot size is the fixed number of shares (or index units) that one options or futures contract covers. You can't buy or sell a fraction of a lot — every trade happens in whole multiples of it.
How It Works
The exchange (NSE, for Indian F&O) sets lot sizes, and revises them periodically to keep a contract's total value within a target band as the underlying's price moves. A stock that's rallied hard will usually see its lot size cut, so one contract doesn't get prohibitively expensive. That means the lot size you traded with last year may not be the one that applies today.
Example
At the time of writing, Nifty's lot size is 65 units (check the live figure before trading, since it's revised periodically). If a Nifty option's premium is ₹150 per share, one lot costs ₹150 × 65 = ₹9,750, not ₹150. Two lots would be 130 units and cost ₹19,500 — you can't trade, say, 40 units on their own.
Warning
Don't assume the lot size you remember is still current. Exchanges revise index and stock lot sizes periodically, and trading on an old number will throw off your position sizing and margin calculations.
Related Terms
- F&O (Futures & Options) — the contract category lot size applies to
- Option Chain — where you'll see the strike and premium a lot size trade applies to