Notional Value

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

For example, one S&P 500 Index futures contract obligates the buyer to 250 units of the S&P 500 Index. If the index is trading at $1,000, then the single futures contract is similar to investing $250,000 (250 x $1,000). Therefore, $250,000 is the notional value underlying the futures contract.


Investment dictionary. . 2012.

Look at other dictionaries:

  • notional value — The underlying value ( face value), normally expressed in U.S. dollars, of the financial instrument or commodity specified in a futures or options on futures contract. Chicago Mercantile Exchange Glossary …   Financial and business terms

  • notional — no‧tion‧al [ˈnəʊʆnəl ǁ ˈnoʊ ] adjective a notional amount, price, rent etc is not real but is guessed at or used as an example: • an amount which had been based on the notional values of the homes which they occupied * * * notional UK US… …   Financial and business terms

  • Notional amount — The notional amount (or notional principal amount or notional value) on a financial instrument is the nominal or face amount that is used to calculate payments made on that instrument. This amount generally does not change hands and is thus… …   Wikipedia

  • notional — [[t]no͟ʊʃən(ə)l[/t]] ADJ Something that is notional exists only in theory or as a suggestion or idea, but not in reality. [FORMAL] ...the notional value of state assets. Syn: theoretical Derived words: notionally ADV ADV with cl/group, ADV with v …   English dictionary

  • notional income — noun Financial benefits, eg the use of a company car, that have a calculable cash value for taxation purposes • • • Main Entry: ↑notion …   Useful english dictionary

  • notional amount — The principal amount or face value of a derivative. Defined by the Financial Accounting Standards Board ( FASB) in FAS 133 as the number of currency units, shares, bushels, pounds or other units specified in a derivatives contract. The notional… …   Financial and business terms

  • Notional Principal Amount — In an interest rate swap, the predetermined dollar amount on which the exchanged interest payments are based. Each period s rates are multiplied by the notional principal amount to determine the value of each counterparty s payment …   Investment dictionary

  • notional amount — noun A nominal amount of a financial instrument that is used to calculate payments made on that instrument, especially for instruments that do not have a well defined face value or par value …   Wiktionary

  • notional principal amount — Fin the value used to represent a loan in calculating interest rate swaps …   The ultimate business dictionary

  • nominal value — The face value of a bond or a share ( shares) (which will not usually be the same as its price). Also known as par value. For a bond or redeemable share, it will usually indicate the value at which the bond or share will be redeemed by the issuer …   Financial and business terms

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