Spread

(i) The difference between a market-maker’s bid and offer price.

(ii) In futures markets, an investor goes long (buys a futures contract) in one delivery month and goes short (sells a futures contract) in a different delivery month, with the intention of balancing out his/her risk. Because of this the initial margin may be less. This is also known as an ‘inter-delivery spread’ or straddle.

(iii) In options, spreads involve the simultaneous holding of puts and calls. A ‘spread order’ is the buying and selling of options of the same type (either puts or calls) with different maturities and/or different striking prices. See also Bear Spread, Bull Spread.