In the context of an interest rate swap, the notional principal amount is the specified amount on which the exchanged interest payments are based; this could be 8000 US dollars, or 2.7 million pounds sterling, or any other combination of a number and a currency.
Each period's rates are multiplied by the notional principal amount to determine the height and currency of each counter-party's payment.
For example, assume the underlying property is the S&P 500 stock index" A would pay B the London Inter-Bank Offered Rate, multiplied by a $100 notional amount plus depreciation, if any, on a $100 notional investment in the S&P 500 index.
The formula is as follows: Notional amount = number of options * multiplier * strike price.
Levered ETFs, notably inverse exchange-traded funds, have the unusual property that their notional changes every day; they pay the compounded daily return, so it is as if one were re-investing each day's earnings at the new daily price.
Conversely, if the asset has gone up in value in this situation, the notional will go down, as seen in inverse exchange-traded funds,