Why are Market Lots Different for Different Stocks?
Written by Subhasish Mandal
Published on December 23, 2025 | 2 min read
Have you ever wondered why market lots are different for different stocks in futures and options? The motive is to standardise the quantities used to buy and sell stocks on the market. Market lots are the minimum number of shares that can be traded in a single transaction in the derivatives market.
What is Lot Size?
The lot size refers to the minimum number of shares or contracts which must be traded in a single transaction. This is also known as a market lot. The lot size of any stock, indices or, currency or commodity is set by the exchange to streamline the trading process and manage risk.
Example: In Nifty derivatives, the current market lot is 65 shares. It means that to buy or sell one lot of Nifty contracts, the trader has to take a position of a minimum of 65 shares. 1 lot = 65 shares. To buy more shares, the trader has to buy in multiples, which means 2 lots = 65 x 2 = 130 shares and so on.
How Lot Size is Decided?
In India, Lot sizes of stocks are decided by exchanges based on the notional value range provided by the regulator SEBI. Notional value is the face value of a financial contract used to calculate the size of the contract and measure risk exposure.
A lot size is decided by considering the current share price, market liquidity, volatility and investors' accessibility. Lot sizes are reviewed periodically and adjusted when the stock price changes significantly and the total value of the lot comes out of the notional range.
Why to Understand Market Lot Size?
Understanding market lot size is important because it defines the minimum trade quantity, which directly affects your capital requirement, risk exposure and profit and loss.
The key reasons to understand market lot sizes are:
Risk Management
Market lot determines how much money changes hands with each price tick, allowing traders to manage risk from micro lots to standard lots.
Capital and Cost Calculation
Lot size reveals the actual cost required to enter the trade. It also tells the margin requirement needed for the position.
Standardisation and Efficiency
Creates a common unit for trading and keeps the process systematic for all market participants.
Trading strategy
Market lots are essential for developing strategies, as it directly impacts profitability.
Why Do Market Lots Vary for Different Lots?
Market lots are essential for the smooth flow of trading mechanisms. The key factors that determine why market lots vary for different stocks.
Share Price
Stocks with a high share price typically have small lot sizes. It helps to keep the overall contract value manageable for a wider range of investors. Conversely, lower-priced stocks have larger lot sizes to ensure the notional value of contracts meets the minimum requirement set by regulators.
Regulatory Guidelines
The Securities and Exchange Board of India (SEBI) regulates the financial market. It mandates a specific notional value range for F&O contracts. Exchanges decide the lot size so that when multiplied by the share price, the notional value falls in the SEBI-decided range.
Liquidity and Trading Volume
Highly liquid stocks often have smaller lot sizes to facilitate frequent trading and price discovery. Less popular stocks may have higher lot sizes to ensure decent transaction volume.
Risk Management and Speculation Control
Setting a minimum lot size requires a certain amount of capital to enter a trade. It discourages small investors from participating in excessive speculation and encourages more informed decisions.
Corporate Actions
Corporate events like stock splits or bonuses change the number of outstanding shares and the actual share price. It promotes exchanges to revise the market lot of the stock to maintain the desired notional value.
The market lots are important for the smooth functioning of derivative trading. It has a direct bearing on trading cost and accessibility. Market lots are different for different stocks due to various reasons. The variability in market lots takes the unique characteristics of each stock into consideration and ensures order and efficiency in markets.
About Author
Subhasish Mandal
Sub-Editor
finance professional with strong expertise in stock market and personal finance writing, he excels at breaking down complex financial concepts into simple, actionable insights. Holding a Master’s degree in Commerce, he combines academic depth with practical knowledge of technical analysis and derivatives.
Read more from Subhasish
Upstox is a leading Indian financial services company that offers online trading and investment services in stocks, commodities, currencies, mutual funds, and more. Founded in 2009 and headquartered in Mumbai, Upstox is backed by prominent investors including Ratan Tata, Tiger Global, and Kalaari Capital. It operates under RKSV Securities and is registered with SEBI, NSE, BSE, and other regulatory bodies, ensuring secure and compliant trading experiences.
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