1. Commodities trading: Difference between the buying and selling price of the same commodity in (1) different delivery months in the same market (exchange) or (2) in different markets but in the same delivery months. Also called bid and asked spread.
2. Foreign exchange: (1) Difference between a long position in one currency and a short position in another, or (2) between different delivery dates of the same currency.
3. Investments: Diversity of an investment portfolio; greater the spread, lesser the chance of crippling losses or spectacular gains.
4. Securities trading: Difference between the (1) buyer's price (bid) and the seller's price (offer) which increases or decreases in step with the demand and supply of the security, (2) return (yield) from securities of the same rating (such as treasury bonds) but of different maturity periods, or (3) return from the securities of the same maturity periods but different ratings.
5. Underwriting: Difference between the amount paid to the issuer of the security and the price paid by the public, as the basis for establishing underwriting fee.
Use 'spread' in a Sentence
Ken knew there would be some discrepancy in the stock price, but was surprised that the spread was so significant in just three months' time.
Using the spread will allow you to dig deeper into a companies situation and find the right places to invest your money.
When you are dealing in the commodities market knowing the spread can help you figure out where the big profits may lie.
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