Contract Multiplier and Adjustments

Summary

The contract multiplier converts a displayed per share option Greek or price into the actual per contract exposure. Adjusted contracts can use a different multiplier, so assuming the standard 100 can misstate risk.

Definition

A contract multiplier is the number of underlying units represented by one options contract and is used to scale prices and Greeks into real cash exposure. In this article, the practical point is that many platforms display Greeks on a per share basis, so you usually multiply by the contract multiplier and then by the number of contracts to reach the true position exposure. For standard U.S. equity options that multiplier is commonly 100, but adjusted contracts or special products may differ. That is why the article stresses checking the multiplier rather than assuming it, especially before hedging, sizing or comparing instrument Greeks with position Greeks.

Sources

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