This topic provides examples of implied orders. An implied order is a spread order created based on orders available in the outright market ('IN') or an outright order created based on orders available in the spread market ('OUT'). CME Globex creates Implied IN/OUT orders in outright and spread markets simultaneously without the risk to the trader/broker of being double filled or filled on one leg and not on the other leg. By conjoining the spread and outright markets, implied functionality substantially increases market liquidity. For example, a buy in one instrument month and an offer in another instrument month in the same futures instrument can create an implied order in the corresponding calendar spread.

There are two different ways of processing implied spread orders discussed in the following sections.

Implied (IN) Orders

These orders are derived from existing outright orders in individual contracts (legs). This means that an outright order in a spread can be matched with other outright orders in the spread OR with a combination of orders in the legs of the spread based on price and the rules corresponding to the method of allocation being used. Refer to following two possible structures.

Implied (OUT) Orders

These orders are derived from the combination of an existing outright order in a spread and an existing outright order in one of the individual underlying legs. These two outright orders are utilized to create a contingent outright order on the other underlying leg of the spread. This means that an outright order in a leg can be matched with other outright orders for this specific leg OR with a combination of orders from any spread composed of this leg and orders of the other corresponding leg of the spread. This process is executed based on price and the rules corresponding to the method of allocation being used. Refer to the following four possible structures.