Strike Notional and Spot Notional for Equity Options

Summary

The document defines two notional measures for a position in call options on a stock. For a position of n contracts, each covering c shares, with strike K and current stock price P, strike notional is the contract share count multiplied by the strike, while spot notional uses the current stock price instead. The measures therefore differ by which price is applied to the total underlying share exposure.

The explanation is a simple definition with no worked market example, discussion of portfolio uses, or evidence beyond the stated formulas. It applies to the specified call-option setup; the document does not discuss how notional should be interpreted for other option structures or how traders use either measure for risk limits or reporting.

Key ideas

• Strike notional multiplies the total shares represented by the options by the strike price.
• Spot notional multiplies the same share count by the current underlying price.
• The two notionals differ because one uses the strike and the other uses spot.

Tags

# difference between strike notional and spot notional


# difference between strike notional and spot notional












Can someone please explain the difference between strike and spot notional? in the context of equity options trading?

## Answer by Alper (score 2)

https://quant.stackexchange.com/a/74484

Suppose one owns $n$ call options with a strike price of $K$ on stock X and each option gives the right to buy $c$ shares of X. Also assume the spot price for stock X is $P$. Then, for this position (or trade):

Strike notional $ = n \times c \times K$,

Spot notional $ = n \times c \times P$.

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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.