Spread

A spread is the difference between two prices, rates, or yields. The spread commonly refers to a difference in price between the bid and the ask for a security or asset, known as the bid-ask spread. The spread trade is the difference between two related trading positions, such as the gap between a short position in a futures contract and a long position in another futures contract of a related asset. The spread can also refer to the difference between the price paid by an investor for a security and the amount paid to the issuer of the security. Finally, the spread can refer to the difference between the prime interest rate or benchmark yield and the interest rate a borrower pays to get a loan.