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Spread \ (1) The gap between bid and ask prices of a stock or other security. (2) The simultaneous purchase and sale of separate futures or options contracts for the same commodity for delivery in different months. Also known as a straddle. (3) Difference between the price at which an underwriter buys an issue from a firm and the price at which the underwriter sells it to the public. (4) The price an issuer pays above a benchmark fixed-income yield to borrow money.
1. The difference between the bid and the ask prices of a security or asset.
The difference between the bid price and the offer price for shares and for units in a unit trust. Market makers make their profit from the spread. They buy shares at the lower bid price and sell at the higher offer one.