Lot size

Lot size refers to the standardized quantity of the underlying asset that a single options contract represents. In options trading, one contract typically controls a specific number of units of the underlying asset, known as the lot size. For example, in the case of equity options, the standard lot size is usually 100 shares of the underlying stock. This means that each option contract gives the holder the right to buy or sell 100 shares.

Understanding the lot size is crucial for calculating the total value of an options trade, as the quoted price is per unit of the underlying asset, not the entire lot. Therefore, the actual cost or profit from trading an option must be multiplied by the lot size to reflect the full financial impact.