Bid Ask and Mid
Separate executable sides from the midpoint used for analysis.
Build the mental model first.
Bid is where a buyer stands, ask is where a seller stands and mid is only their arithmetic centre. The spread is a cost and a liquidity signal.
Separate executable sides from the midpoint used for analysis.
Now make it exact.
Notation and units
Decimal rates and volatilities, year-fraction time and continuous compounding unless stated otherwise.
Every model has a price.
Educational conventions are stated explicitly and may simplify market quotation or settlement details.
Rates are continuously compounded unless the section says otherwise.
Inputs are deterministic in the base model.
“An unstated convention is a future reconciliation break.”— THEQUANTBATEMAN
Why a quant cares.
Quote validation, transaction-cost estimates, marking policy and model-versus-market comparisons.
The hedge has opinions.
Start with the quote convention, then ask which Foundations risk survives the hedge. A number without its convention is merely well-dressed ambiguity.
Ask Bateman about this model →