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Notional Value

Standardized Contracts

One of the primary advantages of trading a futures market on a regulated exchange is that these markets trade standardized contracts. A standardized contact establishes a fixed Contract Unit and Expiration Date.

Contract Unit can be based on Volume, Weight or Financial Measurement.

Examples of Futures Contract Units

  • - Volume based Contract Unit -- Crude Oil (CL) futures. The standardized contract unit for this market is 1,000 barrels of Oil.
  • - Weight based Contract Unit -- Gold (GC) futures. The standardized contract unit for this market is 100 troy Ounces.
  • - Financial Measured Contract Unit -- Classic Emini S&P 500 (ES) futures. The standardized contract unit for this market is $50 (or the value or one point).

Notional Value is also known as Contract Value.

Notional Value (CV) = Unit of the Contract x Market Price

The Notional Value is the amount of value that is controlled by an open position. The Notional Value is calculated by the Contract Unit times the Market Price.

Examples of Notional Value

  • - Volume based Contract Unit -- Crude Oil (CL) futures. The standardized contract unit for this market is 1,000 barrels of Oil. Let’s assume the futures market price is $60 per barrel.

    Notional Value = $1,000 (the Contract Value) x $60 (the Price) = $60,000
  • - Weight based Contract Unit -- Gold (GC) futures. The standardized contract unit for this market is 100 troy Ounces. Let’s assume the futures market price is 1,295 per Ounce.

    Notional Value = $100 (the Contract Value) x $1,295 (the Price) = $129,500
  • - Financial Measured Contract Unit -- Classic Emini S&P 500 (ES) futures. The standardized contract unit (also known as the Multiplier) for this market is $50 (or the value or one point). Let’s assume the futures market price is 2,835.

    Notional Value = $50 (the Contract Value) x 2,835 (the Price) = $141,750

Leverage Ratio

Leverage Ration = Notional Value / Margin Requirement The leverage ratio is the amount of capital required (or deployed) related to the notional value of a position. The amount of capital required is called the Margin. Margins in futures trading are set at two different levels, Overnight Margins and Day Trading Margins.

Overnight Margin requirements are determined directly by the futures exchange on positions held past the close of any given trading session/day. Some traders hold these positions for long periods of time.

Day Trade Margin are set by the brokerage firm and are substantially lower than Overnight Margins. Day Trade Margins can be applied to open positions that are closed during the same trading session/day.

Examples of Leverage Ratio

  • - Overnight Positions Crude Oil (CL) futures. Let’s assume an overnight margin of $3,150 and a day trade margin of $1,000 per contract and a notional value as described above.

    Leverage Ratio Overnight = $60,000 / $3,150 or 19:1 Leverage Ratio Day = $60,000 / $1,000 or 60:1
  • - Overnight Positions Gold (GC) futures. Let’s assume an overnight margin of $3,400 and a day trade margin of $1,000 per contract and a notional value as described above.

    Leverage Ratio Overnight = $129,500 / $3,400 or 38:1 Leverage Ratio Day = $129,500 / $1,000 or 129:1
  • - Overnight Positions E-Mini S&P (ES) futures. Let’s assume an overnight margin of $6,500 and a day trading margin of $500 per contract and a notional value as described above.

    Leverage Ratio = $141,750 / $6,500 or 21:1
    Leverage Ratio = $141,750 / $500 or 283:1


Note: Both Overnight and Day Trading margins can and do change as market conditions change. Margins are related to market volatility and as well as volume and price.

Stock Index Futures Comparisons

The CME Group has recently launch new Stock Index Futures markets called the Micro E-mini Stock Index futures which are 1/10th the size of the Classic E-minis.

Infinity Futures

In futures trading, depending on the capital in your account, traders can obtain lower margin requirements than other types of securities. Because of this traders can have a greater level of leverage. The lower the margin, especially Day Trading Margins, the higher the leverage and riskier the trade. Leverage can work for you as well as against you, it magnifies gains as well as losses.

Who Can Trade Micro E-Mini Futures?

  • - Notional values for stock index complex have increased substantially and eclipse other futures contracts
  • - A Micro E-mini contract will benefit newer traders and those with smaller account sizes that desire trading flexibility/precision for scaling in/out of trades
  • - A Micro E-mini has many advantages when compared with ETFs.
  • - While many new futures accounts have been opened, some of those have not yet traded futures. Micro contract has the desired risk profile to commence futures trading.
  • - A Micro E-mini contract offers all the great advantages of our equity product suite at 1/10th the size.
  • - A Micro E-mini can be used by traders and hedgers.
  • - At some firms, clients not eligible (because of insufficient account size, net worth, income) to trade stock index futures might now qualify to trade Micro E-minis.
  • - A micro contract will allow newer traders to reduce risk from two viewpoints: Margin and dollars at risk.