What is defined as an 'odd lot'?

An 'odd lot' is defined as a transaction that involves fewer shares than a round lot, which is typically considered to be 100 shares. Therefore, transactions involving under 100 shares are categorized as odd lots. This designation carries significance in trading, as odd lots can be treated differently than round lots in terms of pricing, execution, and market liquidity.

Transactions that consist of exactly 100 shares are deemed to be round lots, while those involving more than 100 shares exceed what is considered an odd lot, classifying them simply as larger transactions. The definition of odd lots plays a crucial role in the trading strategies of investors and traders, especially when dealing with smaller volumes that may not be as readily traded. Thus, the understanding of odd lots is essential for navigating the equity markets effectively.