Odd Lots, Round Lots, and Mixed Lots

Written By

Dan Buckley

Updated

Oct 10, 2022

Odd Lot

An odd lot is an order for a security that is less than the standard unit of trading for that particular security.

An odd lot trade may be more expensive than a trade involving a standard lot, due to the higher transaction costs associated with odd lot trades.

An odd lot order may also take longer to execute, as there may be fewer market makers willing to provide liquidity for an odd lot trade. Odd lot orders may be particularly difficult to execute during periods of higher market volatility, when liquidity is more scarce.

Odd lot orders are often placed by retail investors who are buying or selling small amounts of securities. Many brokerages allow their clients to place odd lot orders at the same commission rate as standard lot orders.

Some investors believe that odd lot trades can be used to gauge market sentiment, as odd lot orders are more likely to be placed by individual investors who are buying or selling securities for their own account, rather than by professional traders.

Odd Lot Example

Say a shareholder owns a standard 100 shares in a particular company.

If the company executes a reverse 1-for-4 split, now the individual holds 25 shares. Given that 25 shares is less than the standard 100-share lot, this is considered an odd lot.

The shareholder may want to unload the position, but because it is an odd lot, a market maker may not be willing to take on the trade. The shareholder may have to sell at a lower price than if he had a standard 100-share lot.

Round Lot

A round lot is something that is not 100 but is divisible by 100.

Round Lot Example

300 shares is an example of a round lot because it’s divisible by 100. 500 shares is also an example of a round lot. 1,000 shares is an example of a round lot, and so on and so forth.

3,145 shares is not a round lot because it’s not divisible by 100. Neither is 5,001 shares.

The existence of round lots makes it easier for market makers to trade securities.

It’s much easier for a market maker to buy or sell 300 shares than it is to buy or sell 3,145 shares. As a result, market makers are more likely to provide liquidity for trades involving round lots.

This means that traders who want to buy or sell securities in round lots are more likely to get better prices than those who want to trade in odd lots or mixed lots.

You may also notice in your own trading if you watch your orders fill live that if you sell, e.g., 3,145 shares, you might see the trade execute in round lot blocks and fill the odd lot amount more slowly.

Stock Market Terms Explained: Odd Lot vs. Round Lot of Shares

Mixed Lot

A mixed lot is a share total that is larger than 100 but not divisible by 100.

Mixed Lot Example

3,467 shares is an example of a mixed lot because it’s larger than 100 but not divisible by 100.

Mixed lots present the same challenges as odd lots when it comes to trading. Market makers are less likely to provide liquidity for mixed lot trades, and these trades may take longer to execute.

As with odd lot trades, mixed lot trades may be more expensive due to the higher transaction costs associated with these types of trades.

Some brokerages allow their clients to place mixed lot orders at the same commission rate as standard lot orders. However, many brokerages charge higher commissions for mixed lot orders.

FAQs – Odd Lots, Round Lots, and Mixed Lots

How do you end up with a mixed lot?

The trader either buys a mixed lot or ends up with a mixed lot based on a dividend reinvestment plan (DRIP) assigning an odd number of shares to an existing total.

For example, say a trader wanted to invest $50,000 into a certain stock trading at $45.

Based on simple division, he would need to buy $50,000 / $45 = 1,111 shares.

Now let’s say this stock issues a quarterly dividend of $1 per share.

And say he’s enrolled in a DRIP, which means the money will be automatically reinvested in shares.

So every quarter, $1,111 will need to be reinvested in shares.

At $45 per share, that means he will get $1,111 / $45 = 24 new shares per quarter (and some amount that doesn’t quite add up to a new share so will be distributed back as cash).

So 1,111 shares will become 1,135 shares adding in the 24 new shares, and so on.

How do you end up with an odd lot?

Either by buying an odd lot of shares or having something occur, like a reverse split in a security.

Are odd lots more expensive to trade?

They may be, but with the rise of retail trading over the years and services catered toward helping individual traders and investors, more market makers are willing to accommodate odd lot liquidity without extra fees.

What’s the difference between a round lot and a standard lot?

A standard lot is a bundle of 100 shares while a round lot is divisible by 100.

It’s simply more convenient for market makers to deal in 100-share bundles than any other number.

As a result, it’s easier for investors to buy and sell round lots of securities.

This convenience comes at a price though since investors who don’t trade in round lots may have to pay higher transaction costs.

What’s the difference between an odd lot and a mixed lot?

An odd lot is a bundle of shares that is less than 100. A mixed lot is a bundle of shares that is larger than 100 but not divisible by 100.

Mixed lots present the same challenges as odd lots when it comes to trading. Market makers are less likely to provide liquidity for mixed lot trades, and these trades may take longer to execute.

As with odd lot trades, mixed lot trades may be more expensive due to the higher transaction costs associated with these types of trades.

Some brokerages allow their clients to place mixed lot orders at the same commission rate as standard lot orders. However, many brokerages charge higher commissions for mixed lot orders.

Conclusion – Odd Lots, Round Lots, and Mixed Lots

Odd lots, round lots, and mixed lots are simply different bundle sizes of shares.

An odd lot is less than 100 shares, a round lot is divisible by 100 shares, and a mixed lot is larger than 100 but not divisible by 100 shares.

Mixed lots and odd lots can be more expensive to trade because they’re not as liquid as round lots and market makers may charge higher commissions for these types of trades.

However, with the popularity of retail trading, more market makers are willing to provide liquidity for odd lot and mixed lot trades without extra fees.

Some brokerages also allow their clients to place mixed lot orders at the same commission rate as standard lot orders.

So it’s worth shopping around to find the best deal if you plan on trading mixed lots.