Bid Offer

A bid-offer is a commonly used concept in financial markets used to describe the difference between the bid and offer for a particular security or asset.

What are they?

Bid

This is the highest price a buyer is willing to pay for a particular security or asset

Offer

This is the lowest price a seller is willing to sell a particular security or asset for

Looking at a financial instrument such as a stock or currency pair, usually you will see two listed prices: the bid price and the ask price (offer).

A stock listed with a bid price of $20 and an ask price of $20.15, tells us that buyers are willing to buy the stock at a maximum price of $20 and sellers are willing to sell it at a minimum price of $20.15.

The bid-offer spread is the difference between the bid and ask prices. Thus, the spread above $0.15. The spread represents the transaction cost or the profit margin for the market maker or broker facilitating the trade.

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