NISM Certifications · NISM-Series-VIII: Equity Derivatives · Trading Mechanism
In the F&O segment of Indian exchanges, what does the term 'lot size' (market lot) of a derivative contract refer to?
Lot size is the fixed number of units of the underlying covered by one derivatives contract. Orders must be entered in multiples of this lot. It is different from tick size, which is the minimum price movement, and from position limits or time to expiry.
- AThe fixed number of units of the underlying in one contract, within which orders are placed in multiplesCorrect
- BThe maximum number of contracts a member may hold at any time
- CThe minimum price movement permitted for the contract
- DThe number of days left until the contract expires
Explanation
Lot size is the fixed quantity of the underlying in one derivatives contract, and orders must be placed in multiples of it. Tick size is the price movement, and position limits cap holdings, so the other options describe different concepts.
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