How to Calculate a Bid-Ask Spread

Save
A graph shows different sets of numbers with an actual graph drawn out as well
A graph shows different sets of numbers with an actual graph drawn out as well (Image: alzay/iStock/Getty Images)

When investors look up security prices in their trading accounts, they see two pricing figures -- the bid and ask prices. Bid prices are the current prices market participants are willing to pay; ask prices are the prices at which market participants will sell. The difference between the two is the bid-ask spread.

Look up the desired security pricing using your trading account website or the website of an online broker that offers quotes without requiring an active account. For example, the E-Trade website allows quote look-up from the homepage without requiring an account or sign in. Enter the stock symbol to find prices. Select option chains after looking up the underlying stock to find option prices..

Write down the bid and ask price of the selected security. For example, in September 2010, Aegean Marine Petroleum Network -- stock symbol ANW -- had a bid price of $17.09 and an ask price of $17.27.

Subtract the bid price from the ask price for the bid-ask spread. In the ANW example, the spread is 18 cents.

Divide the bid-ask spread amount by the ask price to convert the spread to a percentage. For the ANW example, dividing 18 cents by $17.27 results in a spread of 1.04 percent.

Related Searches

References

Promoted By Zergnet

Comments

You May Also Like

Related Searches

Check It Out

4 Credit Myths That Are Absolutely False

M
Is DIY in your DNA? Become part of our maker community.
Submit Your Work!