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# implied IN/OUT orders on CME globex

Discussion in 'Financial Futures' started by saminny, May 2, 2010.

1. ### saminny

Hi,

I need help in understanding the implied orders on CME globex. This is in reference to euro dollar future contracts http://iraepstein.linngroup.com/uploads/exchange-pdfs/cme40.pdf

The IN implied orders is clear. From example 1, for two outright contracts GE1 and GE2, the implied IN GE1-GE2 contract pricing would be:
GE1-GE2 BID = GE1 BID - GE2 ASK
(since we are buying GE1 and selling GE2)

However, the OUT implied orders is not clear. Consider example 5. It says for given outright GE1 and GE1-GE2 spread, the implied GE2 pricing would be:
GE2 BID = GE1 BID - GE1-GE2 ASK
This doesnt make sense to me. Similar to IN, shouldn't it be something like this:
GE2 BID = GE1 ASK - GE1-GE2 ASK (since GE1-GE2 ASK means we are bidding GE2 and selling GE-1). This would make IN and OUT equations similar.

Sam

In the case GE1-GE2 spread refers to +GE1-GE2:

Implied IN:

(+GE1-GE2) BID = GE1 BID - GE2 ASK
You can SELL GE1 and BUY GE2 at the calendar bid.

Implied Out :

GE2 ASK = GE1 BID - ( +GE1-GE2 ) BID

You were right here... if I'm right.
My brain freezes whenever I try to figure out implieds...LOL.

Oops, Error on my part

Implied Out :

GE2 BID = GE1 BID - ( +GE1-GE2 ) ASK