In investing, a spread is the difference between the bid and ask price of a security.

The spread is caused by a number of factors:

  • supply, meaning the total number of securities available for trading;
  • demand, the level of interest in a particular security;
  • trading activity around a security; the higher this activity, the smaller the spread tends to be.

When trading options, the spread is caused by the difference between the strike price and the current market value.