Soybean future on Bloomberg's security description, I see

Contract size = 5,000 bushels

price = 1,200 usd/bushel

contract value = $60,000

How is the contract value of $60,000 derived?

Isn't the contract: value = contract size * price which in this case = 5,000 bushels * price of 1 bushel of 1,200 = $6,000,000 ?


1 Answer 1


This is a great example of how the implicit semantics of prices can catch folks out. In trading, and especially when creating trading software, it's very important to understand exactly what the specific price semantics are for given deal and data input. You should not assume that the literal, quoted price for securities is always an amount of a currency. Moreover, you should never assume that two prices for the same thing always have the same semantics.

For example, futures contracts have set definitions of what a price is and how it is written that are specified by the exchange. However, some futures contracts have multiple allowed price semantics. Eg, USD / bushel and c / bushel may both be perfectly valid, and it's up to the reader to know which is which. This is usually fine for humans who have knowledge of the market, but for computers it's not usually obvious / possible to disambiguate. As such, most systems have to either propagate the additional information, or establish some convention like "Soybean futures prices coming on this feed / interface are always quoted in c / bushel". Most systems do the latter as it's more performant, but can lead to bugs when the incoming data changes relative to the convention.


Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Not the answer you're looking for? Browse other questions tagged or ask your own question.