What Is Lot Size in Options?
Lot size in options trading refers to the minimum number of units (shares or index units) in a single options or futures contract. You cannot buy less than one lot; all derivative contracts are standardised in multiples of the lot size. Lot sizes are determined by NSE and SEBI, and are periodically revised to keep the minimum contract value within a reasonable range for retail traders. Understanding lot size is essential because it determines the minimum capital required to trade any derivative contract.
Lot Sizes for Popular F&O Contracts on NSE
| Underlying | Lot Size | Contract Value (approx.) |
|---|---|---|
| Nifty 50 | 25 units | ~Rs 5.5 lakh (at Nifty 22,000) |
| Bank Nifty | 15 units | ~Rs 6.75 lakh (at BNF 45,000) |
| Nifty Financial Services (FinNifty) | 65 units | ~Rs 1.2 lakh |
| Sensex (BSE) | 10 units | ~Rs 7 lakh |
| Individual stock options (e.g., Reliance) | 250 shares | Varies |
How Lot Size Affects Options Premium Cost
The premium paid is always per unit multiplied by lot size. Example:
- Nifty 22,200 Call option premium: Rs 80 per unit.
- Lot size: 25 units.
- Total premium cost for one lot: Rs 80 x 25 = Rs 2,000.
This Rs 2,000 is the maximum loss for the option buyer. Sellers must maintain a much higher margin (typically Rs 50,000-80,000 for one Nifty contract) because their risk is unlimited.
Why Lot Sizes Are Periodically Revised
NSE and SEBI review and revise lot sizes to keep the minimum contract value within SEBI's mandated range (currently approximately Rs 5-10 lakh per contract for index derivatives). When Nifty 50 rises significantly in price, the contract value per lot increases; NSE may then reduce the lot size to keep the contract value within the target range. Traders should check the current lot size before placing trades, especially if they have been away from the market for several months.
Key Takeaway
Lot size determines the minimum investment (premium) for option buyers and the margin requirement for option sellers. Always verify current lot sizes on NSE before calculating position size and capital requirements. Use the Lemonn app to stay updated on lot sizes, contract values, and margin requirements for all major F&O instruments in Indian markets.
