Point value

Family IV · Costs

Not to be confused with pip value.

Point value is the cash amount that one point of price movement represents for a given position. It depends on the instrument's point size, the number of units or contracts held, and any contract multiplier specified by the exchange or broker. Because these specifications vary by market and provider, point value is not a universal number.^[1]

Calculation

Point value is typically calculated as:

• Point value = point size × units × contract multiplier

The point size is the smallest quoted increment for the instrument. For many exchange-traded futures, the contract multiplier is fixed by the exchange; for other products, it may be 1 or defined by the broker. The result is expressed in the account's currency.

Worked example

Assume a futures contract with a point size of 0.25 index points and a contract multiplier of $50 per point. A trader holds 3 contracts.

Thus, each one-point move in the underlying index changes the position value by $37.50.

Variation across instruments

Point value differs widely between asset classes and specific contracts. For example, a stock index futures contract may have a multiplier of $50 per index point, while a currency futures contract may have a point size of 0.0001 and a multiplier of 100,000 units. Always check the contract specifications provided by the exchange or broker, as these details are not uniform.

Often confused with

pip value

Pip value measures the monetary value of a one-pip movement, where a pip is typically the fourth decimal place in most currency pairs, whereas point value measures the monetary value of a one-point movement, which may be a different increment depending on the instrument; the visible sign is the unit of price movement: pips for pip value and points for point value.

See also

• pip
• spread
• forex spread
• good spread
• swap fee
• raw spread

References

1. ↑ Contract specifications published by the broker or exchange for each instrument. Lot sizes, tick sizes and pip values are set per instrument and differ between venues; read the specification for the symbol you trade.