Calculating Implied Quantities
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Let's examine how to calculate implied quantities. In most cases, the implied quantity is the minimum quantity shared between the two known direct prices that imply the unknown implied price.
Example: In this example there is a 150 lot bid in June at 6000 and a 50 lot Ask in September.
|Crude Oil Contract||Bid Qty||Bid Price||Ask Price||Ask Qty|
|Spread||June - September||50||-11|
The implied quantity is generated by taking the minimum quantity of the two legs used to generate the implied spread Bid price. Only 50 contracts of the June - September spread may trade at -11 as there are only 50 contracts offered in Leg 2 of the spread.