## How it works (Example):

Let's assume you are watching Company XYZ's stock. If the bid price is \$50 and the ask price is \$51.50, then the bid-ask spread is \$1.50. Typically, a trader or specialist on the floor of the New York Stock Exchange would quote the bid-ask spread as follows:

50-51-1/2 100x50 100,000

The last number (100,000) denotes the number of Company XYZ shares traded since the market opened. Note that online trading systems might refer to the bid-ask spread as "BxA."

There may be several bid prices and several ask prices for a security at any point in time. However, only the best bid (that is, the highest price offered for a security) and the best ask (that is, the lowest price asked for a security) are used to calculate the bid-ask spread.

Note that the number of shares wanted and the number of shares offered for sale may be different. This means that an investor may only be able to purchase 5,000 of a desired 10,000 XYZ Company shares at \$51.50 if there are only 5,000 shares for sale at that price.