TY - JOUR T1 - Implied Trading in Energy Futures JF - The Journal of Trading SP - 45 LP - 48 DO - 10.3905/jot.2007.688948 VL - 2 IS - 3 AU - John J. Blank Y1 - 2007/06/30 UR - https://pm-research.com/content/2/3/45.abstract N2 - available in an existing futures market. Implied IN spread orders derive from existing outright orders in individual legs. Implied OUT outright orders are derived from a combination of an existing spread order and an existing outright order in one of the individual underlying legs. Implied functionality fills in “holes” in the market. In other words, it allows both spreads and outright futures traders to participate in a specific contract where there would otherwise have been little or no available bids and asks. Such implied quotes are critical to building volume in new electronic markets like the NYMEX energy contracts. This is particularly true with lightly-traded and longer-dated futures and spreads. In mature markets like CME Eurodollars, implied functionality adds an estimated 16.1% to trades and 11.5% to volume at a given point in time. An impressive 44.6% of NYMEX energy trades on CME Globex are achieved via implied trading. So, implied functionality also provides a great deal of liquidity and depth to mature markets.TOPICS: Futures and forward contracts, developed, commodities ER -