Example 2

An order to buy a risk reversal may be submitted as a conditional order with two legs:

1. sell 1 contract of Put (K1)

2. buy 1 contract of Call (K2)

An order sent at a net price of -45 USDC means that the user wants to be net receiving (put over).

If the Put(K1) clears at 1,100 USDC and the Call(K2) clears at 1,000 USDC then this implies a clearing net price for the risk reversal at [ 1,000 - 1,100 ] / [ 1 + 1 ] = - 50 USD and the previous conditional order would thus be filled.

The net total premium of a conditional order can be calculated by multiplying the net limit price of the order with the sum of the order quantities of all legs.

In the previous risk reversal example, the net total premium would be - 45 * 2 or - 90 USDC