Exposure

How much of a market a position is on, expressed in money. It is the number of contracts multiplied by the contract size and by the current price, which is the same quantity as notional value. On a margined contract this is the figure profit and loss is calculated on, while the sum held against the position is a margin requirement stated as a percentage of it, so the two are different numbers with different jobs. Losses are calculated on the full contract value and are not limited to the amount deposited.

It is measured at more than one level. Gross exposure adds up the value of every position. Net exposure offsets opposing positions in the same instrument, so a long and a short of equal size leave nothing outstanding. Beyond the single instrument, exposure aggregates by what the positions have in common: several pairs each containing the US dollar carry one dollar position larger than any of them individually, and several shares in the same sector move together whatever their names.

Stating size in lots is what hides it. A lot is a different amount of money in every instrument, because contract sizes are set per market, so two positions of the same lot size can carry exposures that differ by an order of magnitude. Correlation hides it a second time: positions that look independent on the ticket can be the same position in substance, and adding them adds exposure rather than spreading it.