Lot Size
The fixed number of units of the underlying that one derivative contract represents.
Formula
Contract Value = Lot Size x Price of the Underlying
Unit
shares
In depth
Derivatives trade only in whole lots, so the lot size sets the minimum position and therefore the minimum risk anyone can take — there is no way to take a smaller one. SEBI revises lot sizes periodically to keep contract values within a target band, which means a lot size can change and with it the capital required to hold the same exposure. Traders frequently reason in premium points and forget to multiply by the lot, which understates both the outlay and the loss by a factor of the lot size. The lot is also what makes derivatives inaccessible below a certain account size, which is a feature of the design rather than a flaw.
Worked example
A premium quoted at 300 sounds small until multiplied: at a lot size of 75 the outlay is ₹22,500, and three lots is ₹67,500. A 40% fall in the premium is a ₹27,000 loss on those three lots.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Lot Size” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.