B/A Spread

B/A spread stands for "bid/ask spread." It is the gap between the highest price a buyer is currently willing to pay for a security (the bid) and the lowest price a seller is currently willing to accept (the ask, also called the offer). If you look at any market quote, you'll see these two numbers sitting side by side, and the spread is simply the ask minus the bid.

This gap exists because buyers and sellers rarely agree on price at the exact moment they place an order. Market makers and other liquidity providers quote both a bid and an ask, and they profit from the difference by buying at the lower bid price and selling at the higher ask price. When you place a market order to buy, you generally pay the ask; when you sell, you generally receive the bid. That built-in gap is a real, if small, cost of trading.

The size of the spread tells you something about how liquid a security is, meaning how easily it can be bought or sold without moving the price much. Heavily traded stocks and popular ETFs often have a spread of just a penny or two. Thinly traded stocks, small-cap names, and many options contracts can have spreads of several percent of the price, or more. Wider spreads mean it costs more, in percentage terms, to get in and out of a position.

The nuance that trips people up is that the spread is not a fixed fee — it changes constantly with market conditions, and it's not the same as commission or other trading costs. It also tends to widen during periods of low volume, high volatility, or right around news events, even for names that are normally tight. Two traders looking at the "same" stock at different times of day can see very different spread costs.