# Round Lot: What It Is, How It Works, and Trends

## What Is a Round Lot?

A round lot refers to a standard trading order of [securities](https://www.investopedia.com/terms/s/security.asp). Round lots can consist of 100 or any multiple of 100 units of securities. Lots are traded on exchanges and are made up of any type of security, including [stocks and bonds](https://www.investopedia.com/stocks-and-bonds-news-5218414). In stocks, a round lot is considered 100 shares or a larger number that can be evenly divided by 100. In bonds, a round lot is usually $100,000 worth. A round lot is often referred to as a normal trading unit and is contrasted with an odd lot.  

### Key Takeaways

*   A round lot is a standard minimum trading size for a security or asset.
*   A round lot of stocks usually equals 100 shares or a multiple of 100 shares.
*   With bonds, a round lot represents $100,000 worth or multiples of $100,000.
*   Odd lots and smaller lots are increasingly common due to technological advances and retail investor demand.

## How Round Lots Work

In trading, a [lot](https://www.investopedia.com/terms/l/lot.asp) is a fixed number of units of a financial asset traded on an exchange. Lots can be bought or sold. As noted above, they can include any type of financial instrument, including stocks and [exchange-traded funds (ETFs)](https://www.investopedia.com/terms/e/etf.asp), bonds, options, futures, and [foreign exchange](https://www.investopedia.com/terms/f/foreign-exchange.asp) among others.

Investment managers and institutions typically purchase stocks in large batches. Round lots often have lower trading costs than other orders, and [discounts](https://www.investopedia.com/terms/d/discount.asp) are applied for various round lot amounts. Round lots help simplify the trading process and increase [market efficiency](https://www.investopedia.com/terms/m/marketefficiency.asp).

Historically, a round lot of 100 shares of stock has been the smallest order that can be placed through an [exchange](https://www.investopedia.com/terms/e/exchange.asp). However, that is changing. Today, so-called odd lots and [fractional shares](https://www.investopedia.com/terms/f/fractionalshare.asp) allow for the execution of orders as small as one share on some exchanges or even a fraction of a share.  

## Types of Round Lots

*   **Stocks:** As noted above, a round lot of stocks is typically comprised of 100 shares. In other cases, it can be a multiple of 100. Since ETFs trade just like stocks, they also fall in this category.
*   **Bonds:** A round lot in [bonds](https://www.investopedia.com/terms/b/bond.asp) is usually $100,000 worth of bonds or a multiple of $100,000. Any other amount is considered an odd lot and incurs higher trading costs. That said, innovation is ongoing in the bond market, too, and mechanisms are evolving for smaller blocks and odd-lot trades.
*   **Options:** In the [options](https://www.investopedia.com/terms/o/option.asp) markets, a round lot consists of 100 contracts in listed calls and puts. Investors can buy one options contract. Each of those contracts typically represents an odd lot of stock. Other markets, such as [commodities markets](https://www.investopedia.com/terms/c/commodity-market.asp), have their convention for what is defined as a round lot.
*   **Futures:** In the futures market, contract sizes are called lots. The contract or lot size depends on the nature of the underlying asset being traded, such as a [commodity](https://www.investopedia.com/terms/c/commodity.asp), currency, or interest rate. For instance, the lot size of a futures contract for wheat is 5,000 bushels.
*   **Foreign Exchange:** Lot sizes vary in the forex market. A standard lot is comprised of 100,000 units of the [base currency](https://www.investopedia.com/terms/b/basecurrency.asp). There are also micro and mini lots, which hold 1,000 and 10,000 units of the base currency.

> **Fast Fact**
>
> Round lots are generally executed quicker, although trading in odd lots is becoming easier and less costly.

## Round Lots vs. Odd and Mixed Lots

A lot consisting of fewer than 100 shares or a lot that cannot be evenly divided by 100 is called an [odd lot](https://www.investopedia.com/terms/o/oddlot.asp). Odd lots may be combined or bunched into round lots to facilitate trading. A [mixed lot](https://www.investopedia.com/terms/m/mixedlot.asp) consists of both a round lot and an odd lot. An order of 198 shares would be considered a mixed lot.

[Odd lots are increasingly common](https://www.investopedia.com/ask/answers/08/odd-lot-buyback.asp), but they generally incur higher costs. Improved electronic trading technologies helped reduce any additional fees. Nevertheless, odd lot trades may not be allowed or given priority. Some exchanges may require only round lots for pre-specified market orders, including reserve orders. These orders are placed for trades at a specified transaction price, and preference is given for round lots.

Even fractional shares can now be traded. This type of trading originally allowed for dividend [reinvestment](https://www.investopedia.com/terms/r/reinvestment.asp). Many brokerages now use it to allow their customers to use a [dollar-cost investing](https://www.investopedia.com/terms/d/dollarcostaveraging.asp) strategy. The customer sets a personal goal of investing a set amount of money, say $200, every month in a particular stock or fund, regardless of its price swings.

## What Is a Round Lot Holder?

A round lot holder is a party who owns a round lot of unrestricted shares. A round lot is made up of 100 shares or a multiple of 100 shares. Unrestricted shares are those that do not required any conditions to be filled before they can be transferred or sold.

## What Is a Board Lot?

The term board lot refers to the standard number of units of shares set by an exchange as a single trading unit. For most exchanges, this is generally the same as a round lot, which represents 100 shares or a multiple of 100 shares. Keep in mind, though, that the size of a board lot may change based on the exchange, so it may be higher in some cases. For instance, Japanese exchanges have board lot sizes of 1,000 shares.

## Are Round Lots More Common Than Odd Lots?

Round lots are among the most common large trading orders as they incur the lowest trading fees. But odd lots are becoming more common among traders and brokers. That's because automated and electronic trading makes it easier to execute these trades at lower costs.

## The Bottom Line

A lot is the total number of units of a financial instrument that is bought and sold on an exchange. Lots can be mixed, odd, or round. The size of a round lot is determined by the exchange. In most cases, it is made up of 100 shares of a financial security, such as a stock or bond. It may also be a multiple of 100. Trading round lots helps improve market efficiency and, because it's a bulk order, also provides traders with lower trading costs.

> **Article Sources**
>
> 1.  Charles Schwab. "[What are wheat futures?](https://www.schwab.com/futures/wheat)"
>     
> 2.  Fidelity. "[Stock FAQS: International Stock Trading](https://www.fidelity.com/stock-trading/faqs-international)."