What Is Notional Value? | How Do Futures Work?

Notional value is the total market value of the asset a futures contract represents, found by multiplying the contract size by the current futures price. It is usually many times larger than the margin you deposit to hold the contract, and it, not the margin, is what your profit and loss is based on.

The formula

Notional value = contract size (or multiplier) × futures price

Contract sizes come from each exchange’s specifications.

Examples

Prices are illustrative, not quotes.

Contract	Contract size	Illustrative price	Notional value
E-mini S&P 500 (CME)	$50 × index	6,000	$300,000
Micro E-mini S&P 500 (CME)	$5 × index	6,000	$30,000
WTI crude oil (NYMEX)	1,000 barrels	$70	$70,000
Gold (COMEX)	100 troy ounces	$4,000	$400,000
Corn (CBOT)	5,000 bushels	$4.50	$22,500
S&P/TSX 60 (Montreal Exchange)	C$200 × index	1,800	C$360,000

Notional value vs margin

To hold one E-mini contract, a broker might require margin of a few tens of thousands of dollars. Exchange margins change often, so check the exchange for the current figure. But the contract’s gains and losses track the full $300,000 notional value.

If the S&P 500 index rises 1%, from 6,000 to 6,060, the E-mini gains:

60 points × $50 = $3,000

That is 1% of the notional value. It might be 10% or more of the margin you put up. The ratio of notional value to margin is your leverage, and it is why small market moves produce large swings in a futures account.

Why it matters

It is your real exposure. Notional value is the honest measure of how much market risk you have taken on. A $2,500 deposit on a micro contract still exposes you to a $30,000 position.
It sizes hedges. A hedger matches the notional value of futures to the value of the asset being protected. A portfolio of $600,000 in US large-cap stocks would need about two E-mini contracts at 6,000 to offset broad market moves (ignoring beta and dividends). See how hedging with futures works.
It moves with price. As the futures price rises, so does notional value. The same number of contracts becomes a bigger position.
Regulators look at it. Large positions, open interest, and fund exposures are often reported in notional terms.

A common mistake

People new to futures sometimes see a small margin requirement and think the trade is small. It is not. Micro contracts lower the notional value, which is useful, but they do not change how leverage works. A 10% drop in the index takes 10% of the notional value, whatever you deposited. That is the theme of micro futures explained.