Is there a required # of shares to buy stocks?
Options require a minimum 1 contract which contain 100 shares. Is there a required # of shares when buying stocks? Or just a general rule of 100 shares?
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904 points
jillybeansisme answered 2 years ago …
It does depend on your broker. For example, if you are a beginning investor with a smaller amount to invest, you can join Sharebuilder. They offer a program where you have automatic investing, buy on Tuesday mornings if your order is in on Monday afternoons by (I think) 1pm, or market trading. You can buy one share or however many you want. Sharebuilder, now owned by ING, bundles the members orders.
You can buy one share of a stock through any broker but it doesn't make sense because of the commissions you have to pay. If you buy less than a round lot (100 shares) you usually pay a higher fee and premium. For example, let's say your brokerage company charges $9.95/trade. If you buy 100 shares, that is 0.095 cents per share. If you buy 25 shares, you'll pay the same $9.95/trade, which is 0.398 cents per share. You can also invest through a DRIP program for many types of shares, especially utility companies. DRIP stands for direct repurchase investment program where you buy the shares directly from the company whose stock you are buying rather than a stock trade through a broker.
Answers
2775 points
Oldman answered 2 years ago …
The general rule is that round lots (100) shares are the usual trades with the smallest bid/ask gap. In many ARCA trades (the major NYSE,AMEX and NASDAQ) the traders and electronic settelements procedures will accumulate the "Odd-Lots" and produce a quotation at some best fit median between the extremes of bid vs asked. So, YES, technically one can offer to buy a few shares (less than 100) of a listed stock, but the cost per share and the "spread" between the low and high prices can be large. The trading system (a brokerage or electronic trading system) may charge more for the odd lot trade. Finally, within that session of trading, there may not be any odd lots ... and if it is a limit order to buy during a one day period, it may be automatically cancelled. There are a number of "not that well known" stocks that do trade odd lots because they haven't split in years: MKL and NVR are twosolid, long term investments, with share prices in the several hundred dollars/share level and small investors aren't going to pay $45000-55000 for a 100 share lot. Then there's Berkshire, but that's another dimension. At one point PTR (Petrochina ADR) was trading at 268.00, and I was going to sell a few shares...and then I realized that was an insane 52x PE and sold the whole 100 share lot. After which, PTR did drop. But that's the only time I've enquired about the trading limitations for odd lots.
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