Examples of lots
A lot can refer to any asset class or financial instrument, but the specific meaning of a lot and its application will vary from market to market.
For example, the standard lot size for the stock market is 100 shares – it is the number of shares that are bought and sold in a normal transaction. This is also known as a ‘round lot’. Exchange traded funds (ETFs) are priced in the same way, so that one lot is equal to 100 shares.
The bond market is slightly different, because the lot sizes tend to be issued in far larger sums. For example, the standard lot for US government bonds is $1 million.
In options trading, lots are often standardised across the board. An equity option, for instance, is priced so that each lot is equal to 100 shares of the underlying asset. However, in the futures market lots are called ‘contract sizes’ instead – these vary greatly depending on what type of contract is being traded.
IG uses lots for CFD trading, where a single contract represents a set quantity of the underlying asset.