The act of dividing a large order of financial securities into several smaller lots in order to allow each portion to be traded at different prices. The ultimate effect of using a split block pricing method is that the trader will receive the order at a price equaling the weighted average price of each block traded.




Taobiz explains Split Block Pricing
In some cases, split block pricing would be used on a large trade order in order to match smaller positions desired by counter-parties to the transaction.

For example, a trader wants to sell 1,000 call options of XYZ corp, assuming that the only two buyers of the XYZ options want to buy 600 options at $5.00 and 400 options at $5.05; the order will be split into two blocks of 600 and 400 contracts (each representing 100 shares), respectively and the selling trader would receive proceeds of $502,000 ((400 x $5.05 x 100) + (600 x $5.00 x 100)).