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spread business definition
- A position taken in two or more options or futures contracts to profit through a change in the relative price relationships. Purchasing an option to expire in October and selling an option on the same asset expiring three months earlier is one example of a spread.
- The difference in price between two futures contracts that are identical except for delivery date.
- The difference between a financial institution's lending rate and the cost of funds.
- The difference between the bid and ask prices for a particular security. A large spread often indicates inactive trading of the security. Also called bid-ask spread, markup.
- See underwriting spread.
- The difference in yields between two fixed-income securities. See also basis point.
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