Notional Value
The full economic exposure of a futures position: Futures Price × Contract Multiplier (or Contract Size).
Formula
Notional Value = Futures Price × Contract Multiplier
Notional value is the total market value of the underlying asset controlled by a futures contract. It reveals the true economic exposure — not just the margin posted — and is central to leverage and risk calculations.
Because futures are margined instruments, a trader may post only 2–10% of notional as margin while holding the full notional exposure. This built-in leverage is the key feature — and key danger — of futures trading.
Example
ES at 5,400: notional = 5,400 × $50 = $270,000. If initial margin is $15,000, the leverage ratio is 270,000 / 15,000 = 18:1. A 1% move in the index ($2,700) equals 18% of the margin posted.
Related Terms
Contract Multiplier
The dollar amount assigned to each index point (or unit) of a futures contract, converting price moves into P&L.
BeginnerContract Size
The fixed quantity of the underlying asset controlled by one futures contract, set by the exchange.
BeginnerDerivative
A financial contract whose value is derived from the price of an underlying asset such as a stock, index, commodity, or currency.
IntermediateFutures Contract
A standardized, exchange-traded agreement to buy or sell an asset at a fixed price on a set future date, settled daily via mark-to-market.
BeginnerInitial Margin
The minimum deposit required to open one futures contract, set by the exchange clearing house (CME, CBOT, NYMEX).
BeginnerLeverage (Futures)
The ratio of a futures contract's full notional exposure to the margin posted, amplifying both gains and losses on the capital committed.
IntermediateLong Futures
Buying a futures contract — agreeing to take delivery (or cash settlement) at expiry, and profiting as the price rises.
Beginner