Lot size is the fixed number of units of an underlying index or stock that make up one futures or options (F&O) contract. The exchange sets this number, and traders can buy or sell only in whole multiples of it. That is the plain answer to what is lot size in F&O.
If the Nifty lot is 65, one contract covers 65 units, and two contracts cover 130. A trader cannot buy or sell a part of a lot, so every order is placed in whole contracts.
It is the smallest tradable bundle, so even one position involves many units of the index or stock.
Who sets it and how it changes
The exchanges set the lot size under the contract value framework of SEBI is the statutory regulator of India's securities market, with the legal duty to protect investors and to promote and regulate that market. Read the full meaning of SEBI. The exchange divides a target contract value by the price of the underlying, and it uses the average closing price of one month instead of the price of a single day.
SEBI's circular on index derivatives in October 2024 raised the minimum contract value for indexes to Rs 15 to 20 lakh. Bank Nifty had a lot of 30 units as of November 2026.
For an individual looking at an index at 20,000 points, a lot of 100 units will give a contract value of Rs 20 lakh.
The lots are reviewed every six months. A revised lot applies only to newly listed contracts, and the contracts already running keep their old lot till expiry.
Lot size vs contract value
Contract value is the lot size multiplied by the price of the index or stock, so a smaller lot reduces the rupee outlay and the margin needed for each position.
Lot size is the number of units, and contract value is the amount in rupees. A lower lot does not make an index cheaper. Contracts already running keep their old lot until expiry, and the lot is not the price of the contract.