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.

INVESTOPEDIA EXPLAINS '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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RELATED FAQS
  1. How is spread calculated when trading in the forex market?

    First, remember that in the forex markets investors trade one currency for another. Therefore, currencies are quoted in terms ... Read Full Answer >>
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