Lot (Securities Trading)

  

Categories: Trading

Rembember the pillar of salt? Lot's wife. Indiana Jones and the melting Nazis? Yeah, it's...not that.

In a financial context, a lot is a fixed quantity of units and defined by the exchange. For stocks, a round lot is a number that can be divided by 100. Odd lots are numbers less than 100, or numbers not divisible by 100. If you were to order a lot in a quantity that combined those two, such as 130, it's a mixed lot.

It would be broken into a round lot of 100, and an odd lot of 30. Exchange-traded securities work with lots of 100. Institutional investors buy debts from bond issuers in large quantities...U.S. government bonds start trading at $1 million. Municipal bonds start smaller, at $100,000. Lesser amounts are known as odd lots.

See: Round Lot. See: Odd Lot.

Related or Semi-related Video

Finance: What is a Round Lot?7 Views

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Finance allah shmoop what is around a lot Well here's

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a square lot and no there really isn't such a

00:10

things a square lots of don't write us so what's

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around lot Well it's one hundred shares of stock and

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or it can be any form or subset of shares

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easily divisible by one hundred Why does this matter Because

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one hundred years ago computers well they weren't even a

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thing and brokerages manually did math on abacus is says

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or abba chi or just you know on that graph

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paper that grandpa has with this thing called a pencil

00:37

Yeah people actually use those things one hundred years ago

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Well the odds of making a mistake from a non

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round lot when shares were split or divided or sliced

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and diced in some julian fry kind of way well

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they were really high so the brokerages wanted to encourage

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investors to buy and sell in round lots to make

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both their jobs easier and to mitigate the risk of

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errors Well historically brokerages would have to bundle non round

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loss together such that they would truncate However many odd

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shares were left after evenly dividing by one hundred in

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order to do business with each other as they were

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in disparate form all around the country in the world

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and telecommunications was basically you know a guy shouting in

01:20

the street asking for buyers like check out this picture

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of wall street's or you know nineteen twelve So what

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is it called when someone wants to sell one hundred

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thirty four point three shares it's a mixed lot Yeah

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there's one unit of around a lot of one hundred

01:37

shares there and then there's thirty four point three shares

01:39

truncated or leftover as an odd lot and generally speaking

01:44

for a long time investors selling odd lots were punished

01:49

in the form of much higher commission rates that they

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would pay in order to execute the trades of those

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odd lots And eventually with computers and regulatory concern the

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commission's minimized because if you think about it the people

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paying the much higher commission rates were generally the poor

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or disenfranchised or uneducated Otherwise they'd have enough dough to

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just buy round lots right And after enough of them

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got taken while the world finally figured out how to

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smash that square peg into that round hole you know 00:02:18.04 --> [endTime] It works

Up Next

Finance: What is Odd Lot Theory?
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What is odd lot theory? Hm, how odd that you don't know...hit play to find out.

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