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I have calculated the NPV of an Equity option and need to account the notional for it and have issues understanding the NPV <-> notional relation.

Example: Strike price 100 Spot rate: 107.41 NPV is 20.0344 using Black Scholes The notional is 900000

Is it correct to account the current spot rate for the amount of contracts: 900000 / 107.41 = 8379.109 times the NPV?

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Not sure what the exact market convention is for equity options and notional value. To my knowledge people use it in 2 different ways, of which what you described is one way:

  • notional = number contracts * spot * multiplier (what you said)
  • notional = number contracts * strike * multiplier (other convention)

Both conventions make sense in their own right. So to answer your question, Yes what you proposed is correct. though the other solution using strike is also correct.

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