Odd-Lot Differential
If you are buying or selling stock in an Odd-Lot, that means you are buying or selling fewer than 100 shares or 100+ shares (but never an even round number of 100s). In general, Odd-Lots don’t necessarily get the market price you’ll see on your computer screen. The price may actually be worse if you’re selling or buying the stock because traders and market makers tend to make their markets in round-lots. In the past, an Odd-Lot Differential would occur which is the difference between the price of stock in 100 Lots and the price for less than 100 Lots. In this case, you would get a worse price buying or selling the stock. However, since trading is becoming more electronic, Odd-Lots won’t be much of a problem.
Generally, the dealer who facilitates an odd-lot transaction will buy the securities 1/8 or 1/4 point below the next round-lot trade, or sell the securities 1/8 or 1/4 above the next round trade. View the video below to learn about Odd-Lot Differential:
About the Instructor
Jack Farmer – Curriculum Director at New York Institute of Finance
Jack specializes in training and consulting solutions for portfolio risk management, FX and interest rate derivatives and trading, equity index and volatility trading, equity derivatives and structured equity products, financial statement analysis and hedge accounting.
Learn more about Mergers and Acquisitions
Learn more about Mergers and Acquisitions in our M&A Professional Certificate course. In this program, you will receive a comprehensive analysis of the major facets of the mergers and acquisitions industry and the skills engaged in executing all areas of transactions from pre to post-merger integration.
What is the Fast Finance series?
The New York Institute of Finance presents the Fast Finance video series – a curated playlist of quick-fire financial lessons pertaining to the securities industry. Fast Finance provides expert knowledge to entry-level analysts to heads of central banks ranging from fast-paced breakdowns of industry developments to complex deep drives into regulations, compliance and securities valuation.
Best of all, these quick, micro-lessons from NYIF are free to access! To view more Fast Finance lessons, click here.
About NYIF
The New York Institute of Finance (NYIF) is a global leader in professional training for financial services and related industries. NYIF courses cover everything from investment banking, asset pricing, insurance and market structure to financial modeling, treasury operations, and accounting. The New York Institute of Finance has a faculty of industry leaders and offers a range of program delivery options, including self-study, online courses, and in-person classes. Founded by the New York Stock Exchange in 1922, NYIF has trained over 250,000 professionals online and in class, in over 120 countries.
See all of NYIF’s training and qualifications here.
Questions or Concerns? Contact us at (347) 842-2501 or email customerservice@nyif.com.
Share #FastFinance
