NISM Certifications · NISM-Series-VIII: Equity Derivatives · Trading Mechanism
In the F&O segment of Indian exchanges, which of the following best describes the 'lot size' of a derivative contract?
Lot size is the minimum quantity of the underlying that one derivative contract represents, as specified by the exchange. Orders must be placed in multiples of this lot. It is not a position limit, a tenure measure or a margin amount.
- AThe minimum number of underlying units in which a contract can be traded, fixed by the exchange as contract multiplierCorrect
- BThe maximum number of contracts a member can hold at any time
- CThe number of days to expiry of a contract
- DThe margin payable per contract at the start of the day
Explanation
Lot size (market lot) is the fixed quantity of the underlying that one contract represents, and orders must be placed in multiples of it. The other options describe position limits, tenure and margin, which are different concepts.
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