The Notional Value Calculation for a Futures Contract

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The term notional value refers to the value or spot price of an underlying asset in a derivatives trade, whether that’s an option, futures, or a currency trade. This value helps perceive the difference between the total amount invested and the total amount associated with the entire transaction. The notional value is calculated by multiplying the units in one contract by the spot price.

Although both describe the value of a…

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