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#### Calculating Implieds From Implieds

With implieds, you may calculate implieds from implieds.

The word generation is used to describe how far away the implied price is from the direct price.

• First generation implieds are composed of only direct prices.
• Second generation implieds require a first generation implied price and at least one direct price.
• Third generation implieds require a second generation implied price.
• Fourth generation implieds require a third generation implied price.
• And so on...

Example: In this example there is a direct Bid price in June and an Ask price in the June - September spread.

June1506000
September756010
June - September  -1075
December  6025200
September - December50-11

The bid price of 6010 in September (shaded yellow) is a first generation implied out order. The price is implied out of the June - September Ask spread price of -10. When the ask spread price of -10 is subtracted from the June bid of 6000, we have a price of 6010 in the September bid.

June Bid (Leg 1)

Implied September Bid (Leg 2)

6000

-

6010

=

-10

The direct price in December may be combined with the first generation implied bid price in September to generate a second generation bid price in the September - December Crude Oil spread (shaded green).

Implied September Bid (Leg 1)

Implied September - December Bid Price

6000

-

6025

=

-11