Spread

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DEFINITION of 'Spread'

1. The difference between the bid and the ask price of a security or asset.

2. An options position established by purchasing one option and selling another option of the same class but of a different series.

BREAKING DOWN 'Spread'

1. The spread for an asset is influenced by a number of factors:

a) Supply or "float" (the total number of shares outstanding that are available to trade)
b) Demand or interest in a stock
c) Total trading activity of the stock

2. For a stock option, the spread would be the difference between the strike price and the market value.

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