Notional Value

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0.03 sec.

Notional Value

1. In an interest rate swap, see notional principal amount.

2. The total value of the spot price of the underlying asset in a derivative contract.

Notional Value

What Does Notional Value Mean?

The total value of a leveraged position's assets. This term is used commonly in the options, futures, and currency markets to describe how a very small amount of invested money can control a large position (and have a large consequence for the trader).

Investopedia explains Notional Value

As an example, one S&P 500 Index futures contract obligates the buyer for 250 units of the S&P 500 Index. If the index is trading at $1,000, the futures contract is the equivalent to investing $250,000 (250 × $1,000). Therefore, $250,000 is the notional value underlying the futures contract.

Related Terms:
• Derivative
• Futures
• Hedge
• Leverage
• Open Interest

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