In the context of options trading, lot size refers to the number of contracts that must be bought or sold in a single order. The lot size of an option contract is determined by the exchange on which it is traded and can vary depending on the underlying asset.
For example, currently, in the Indian stock market, the lot size for NIFTY 50 index options is 75. This means that if an investor wants to buy or sell NIFTY 50 options, they must do so in multiples of 75 contracts.
Understanding lot size is important for options traders, as it can have a significant impact on the cost of trading and the potential profitability of a trade. Similarly, the lot size for individual stock options is determined by the exchange and can vary depending on the stock’s liquidity and other factors. So it is essential to stay updated with the latest information from the relevant exchange.