In soccer and rugby, the “touchlines” are the boundaries on either side of the playing field. They’re the furthest we can go and still stay in play.
In the investing world, the word “touchline” means something similar: it’s the highest price a buyer is willing to pay for a security, or the lowest price a seller is willing to sell it for.
For example, let’s say we’ve got three sellers interested in getting rid of shares of Mediocre Manufacturing, Inc. stock. Annie is offering to sell for $12.50, Ben is offering to sell for $12.75, and Carol is willing to sell for $12.20. In this case, Carol’s offer is the touchline, since it’s the lowest sell offer. On the flip side, let’s say Xavier is willing to pay $12.20 per share for the same stock, while Yvette is willing to pay $12.80 and Zoe is willing to pay $12.55. The touchline here is Yvette’s offer of $12.80, since it’s the highest buy offer.
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Finance: What is Spread?48 Views
finance a la shmoop. what is spread? before we start just no. get your mind
out of the gutter. spread refers to the money value between [100 dollar bill]
a bid and ask price under a market maker structure of trading securities. no more
wire hangers, a plastic hanger company is publicly traded on an exchange like
Nasdaq where buyers bid for a price to purchase and sellers ask for a price to [Nasdaq wall shown]
trade. no more wire hangers is bid this moment at 37:23 a share by buyers
willing to buy right now at that price and is being asked at this moment at a
price of 37.31. note the eight cents a shared difference in the share prices.
that dif is the spread between the two prices, and it's worth noting that in [bread is buttered]
extremely volatile stocks, the spread widens. and in boring highly liquid
stocks which don't move much, the spread tightens or is narrower. that is on a
volatile equivalent of no more wire hangers the spread might grow to 20 or
30 cents a share whereas a boring name that pays a big dividend and the stock
never moves much we're thinking AT&T here, [man snores at a desk]
well that spread might be just three or four cents. so why grow? well because a
market maker in a volatile stock doesn't want to be caught losing money on her
inventory. if no more wire hangers suddenly gapped down to 37.10 a share [equation shown]
well it would be likely less than the average of what the market maker paid
for her quote "inventory" unquote in that stock from which he was making a market
in it. each time the shares trade the market makers dip into that spread to [woman dips cracker in butter]
pay their bills and allow them to keep doing business. so that's spread. and it's
not the type that Prince used to sing about. [man on stage]