zpostcode
notional value
Apr 5, 2025 8:23 PM

  In financial instruments, the notional value (also called the notional amount and the principal amount) is the total value—in dollars or another unit of currency—controlled by an instrument. Depending on the underlying asset or financial instrument, notional value may be used to assess its cost to acquire, calculate payments on the asset or instrument, and, if purchased and/or held in a margin account, notional value may be used to determine the instrument’s buying power.

  The bond market. In corporate bonds, Treasury bonds, notes, and bills, and other fixed-income securities, the notional value is the face value, typically $100 or $1,000. Futures contract. In futures markets, notional value is based on the prevailing price and the contract size of the underlying commodity, stock index, or other financial instrument. For example, if corn is trading at $4.50 per bushel, a standard contract (5,000 bushels) would have a notional value of ($4.50 x 5,000) = $22,500. Futures contracts don’t require a deposit of the full notional value, but rather a “good faith” margin deposit based on notional value. Option contract. Standard U.S. equity option contracts are deliverable into 100 shares of the underlying stock or exchange-traded fund (ETF). For example, if shares of Walt Disney Co. (DIS) are trading for $105 per share, the notional value of a call option would be ($105 x 100) = $10,500. If you purchase shares in a cash account, you would be required to pay the full notional value in order to acquire the shares. If it’s a margin account, you may be allowed to borrow up to 50% of the notional value. Doug Ashburn

Comments
Welcome to zpostcode comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
Recommend >
Battle of Djerba
     Giovanni Andrea Doria Giovanni Andrea Doria, a Genoese admiral, commanded a Spanish-led allied military force against the fleet of the Ottoman Empire at the Battle of Djerba, fought off the coast of Tunisia in May 1560. © Archiv Gerstenberg—ullstein picture/Getty Images. (more) Battle of Djerba [1560] Actions Cite verifiedCite While every effort has been made to follow citation style...
Disco Demolition Night
     Steve Dahl on Disco Demolition Night Disc jockey Steve Dahl coengineered Disco Demolition Night at the Comiskey Park baseball field in Chicago on July 12, 1979. (more) Disco Demolition Night baseball promotion [1979] Actions Share Share Share to social media Facebook X URL https://www.britannica.com/event/Disco-Demolition-Night Share Share Share to social media Facebook X URL https://www.britannica.com/event/Disco-Demolition-Night Written by Meg Matthias Meg...
Ben Elton
     Ben Elton English comedian and writer Ben Elton hosting the Channel 4 television show Friday Night Live, October 21, 2022. (more) Ben Elton British actor, stand-up comedian, screenwriter and dramatist Actions Share Share Share to social media Facebook X URL https://www.britannica.com/biography/Ben-Elton Share Share Share to social media Facebook X URL https://www.britannica.com/biography/Ben-Elton Also known as: Benjamin Charles Elton Written by...
Fred Armisen
     Fred Armisen American comedian and musician Fred Armisen, 2023. (more) Fred Armisen American comedian and musician Actions Share Share Share to social media Facebook X URL https://www.britannica.com/biography/Fred-Armisen Share Share Share to social media Facebook X URL https://www.britannica.com/biography/Fred-Armisen Also known as: Fereydun Robert Armisen Written by Fred Frommer Fred Frommer is a sports historian, author, and writer who has written...
Information Recommendation
Feast of the Seven Fishes
     Feast of the Seven Fishes spread The Feast of the Seven Fishes is an Italian American tradition in which a meal composed of seven different fish dishes is served on Christmas Eve. (more) Feast of the Seven Fishes holiday meal Actions Share Share Share to social media Facebook X URL https://www.britannica.com/topic/Feast-of-the-Seven-Fishes Share Share Share to social media Facebook X...
Prasanth Balakrishnan Nair
     Fighter pilot, astronaut, and rocket scientist Prasanth Balakrishnan Nair Prasanth Balakrishnan Nair is a test pilot and fighter combat leader in the Indian Air Force who has been chosen as the backup mission pilot for the Axiom Mission 4 to the International Space Station and as one of four astronauts for India's Gaganyaan mission to low Earth orbit. (more)...
luminol
     Luminol A specialist examining surfaces for traces of blood using luminol. (more) luminol chemical compound Actions Share Share Share to social media Facebook X URL https://www.britannica.com/science/luminol Share Share Share to social media Facebook X URL https://www.britannica.com/science/luminol Written by Jennifer Murtoff Jennifer Murtoff is a bilingual English-Spanish publishing professional with a master’s degree in Hispanic linguistics. Jennifer Murtoff Fact-checked by...
War Stories: 13 Modern Writers Who Served in War
     Ernest Hemingway, 1918 American writer Ernest Hemingway served as an ambulance driver for the American Red Cross in World War I. (more) War Stories: 13 Modern Writers Who Served in War Actions Share Share Share to social media Facebook X URL https://www.britannica.com/topic/War-Stories-13-Modern-Writers-Who-Served-in-War Share Share Share to social media Facebook X URL https://www.britannica.com/topic/War-Stories-13-Modern-Writers-Who-Served-in-War Written by René Ostberg René Ostberg is...
sarcasm
  sarcasm linguistic and literary device Actions Share Share Share to social media Facebook X URL https://www.britannica.com/topic/sarcasm Share Share Share to social media Facebook X URL https://www.britannica.com/topic/sarcasm Written by Laura Payne Laura Payne is a freelance writer whose work covers many topics. She is a former Wayne State University linguistics instructor. Laura Payne Fact-checked by The Editors of Encyclopaedia Britannica Encyclopaedia...
Global North and Global South
     Global North and Global South A map showing a common depiction of the Global North and the Global South, as divided by the Brandt Line. However, it is important to note that there is not universal agreement regarding where some countries belong within this framework. (more) Global North and Global South Actions Share Share Share to social media Facebook...
manga
     Manga A set of tankōbon volumes of several manga series. Tankōbon collect several chapters of a manga series together in a single volume. (more) manga Japanese literary style Actions Share Share Share to social media Facebook X URL https://www.britannica.com/art/manga-Japanese-comics Share Share Share to social media Facebook X URL https://www.britannica.com/art/manga-Japanese-comics Written and fact-checked by The Editors of Encyclopaedia Britannica Encyclopaedia...
The art of changing jobs: Strategies for finding career success
     Which road will you choose?© Cedar/stock.adobe.comWhether you’re looking to change jobs or switch careers, getting started can feel overwhelming. But there are steps you can take to ease the journey, such as crafting a solid plan. It will take time and persistence, but a detailed road map can help lead you to a more fulfilling role.   You can make...