An implied order is an order CME Globex identifies as existing in the spread market based on orders in the outright market (IMPLIED IN) OR, an order CME Globex identifies as existing in the outright market based on orders in the spread market (IMPLIED OUT).The following examples
Implied quantity follows these basic rules in all markets:
- Implication requires at minimum two orders in related markets in the proper combination.
- Implied bids do not trade against implied offers.
- Implied bids can exist at the same or inverted price levels with implied offers. When this occurs, CME Globex ceases dissemination of the implied bid; however, the bid is still calculated and can be traded against.
- Implied OUT quantity will not disseminate when the leg value of the included spread is in a ratio greater than one. The price and quantity are still calculated and can be traded against.
5. Implied quantity in futures markets does not have time priority.
6. Implied quantity is not available:
- When the market is not in a matching state (e.g. Pre-Open)
- When implied calculation has been suspended (e.g. CME Globex detects a trade occurring outside of limits as a result of implication)
The examples below show how implied orders are constructed in one market based on orders in another.
This brief video introduces the way implied functionality provides liquidity across markets.