Theory: Spreads is defined as the difference between the bid and the ask price of a security or asset.  It is the position option which recommends the purchasing and selling option at different series of the same class. The spread is affected by a number of factors which are given as follows:


a) Supply or "float" (the total number of shares outstanding that are available to trade) 
b) Demand or interest in a stock 
c) Total trading activity of the stock

For a stock option spread is defined as the  difference between the strike price and the market value.


Spread Betting

This a type of assumptions which involves the bet option on the price movement of a security. The company who has spread betting quotes two prices, the one is the bid and offer price, the offer price is also called as the spread. For investors bet the price of the underlying stock is assumed to be lowered than the bid. The investors do not take the underlying stock in spread betting, it simply indicates the price movement of the stock.

 As for example let us suppose that a company containing spread betting quotes a bid of $200 and an offer of $203 for ABC stock and you believe that the price for ABC will be lower than $200. Since you believe that the price of the stock would be go below $200, you could "bet" $2 for every dollar that ABC falls below $200. Therefore, if the stock price after a week came to $190 you would receive $20, but if the price was $215 you would end up losing $30.


Option spread strategy

The process of purchasing and selling the similar kinds of option agreement creates spread trading. A call spread is all about the purchasing and selling of calls where as strategy says going long and short on two agreements.

Debit spread

When the premium buying and selling process goes in the process of loss then it is called debit spread. The debit is of two types Bullish and Bearish. The investors need contract for the debt system in this

Spread indicator

The indicator defines as the difference between the bids and ask price of a security.  The indicator generally used to show the graphical presentation. It is very famous in forex trade. The curve shows in the graph shows that spread goes in which direction and makes flexibility for the investors and marketers since spread is related with bid option and price movement. Spreads are calculated by a metrics option that trader always determine the difference between the bids. For traders trying to trap small fluctuations in the spread determines the spread requirements so that the spread indicator fluctuates in a narrow range.  It has been seen that highly liquid currency pairs have lower spreads.

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