Spread definition

In finance, the spread is the difference in price between the buy (offer) and sell ( bid) prices quoted for an asset.

Many brokers, market makers and other providers will quote their prices in the form of a spread. The price to buy an asset in a spread will always be higher than the price to sell it, with the underlying market price sitting between the two.

Spread can also refer to a strategy in options trading that involves combining multiple options with similar features. This is known as an option spread.

Spread charges

When trading products with spreads, the aim is for the asset to move in value beyond the price of the spread. Doing so means that buy trades can be sold for a profit, or sell trades bought for a profit.

The spread is one way in which traders pay to make trades. Some trades will not have a spread but will instead be charged on a commission basis, and some will feature a mixture of the two.

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