Lots vs Average Cost Purchases
To oversimplify a bit, the cost basis of a set of shares is the amount that was spent acquiring those shares. There are multiple methods of calculating the cost basis such as average cost and lots.
Average Cost This is the simplest calculation method, in which shares are assumed to have a cost basis equal to the average price paid for that security times the number of shares.
Lot-based Cost This calculation method allows you to select which buy transactions (and individual shares within those transactions) were used to purchase the shares for each sale, therefore determining the cost basis of any specific shares in a much more controlled way. Lot-based cost basis calculation allows you to adjust your gain or loss for individual sell transactions to assign more or less profit or a specific ordering to sell transactions.