I haven't read this thread. So I'm going to post something here that I think is worthwhile noting and then just step back and wait for the flame throwers to arrive.
I want to point out that the word "spread" is traders' jargon for the word "difference." Every time a trader uses the word "spread," we, as intelligent, educated human beings, can replace it in our minds with the word "difference." So, for example, the bid-ask spread, becomes the bid-ask difference. Subtract the bid from the ask and you have the difference or "the spread". If a trader says, "I'm trading the spread," he is trading a difference. Between what, who knows? You either have to tell from the context of the conversation, in which case you must fall back on your experience, or else you'll have to ask. If you have to ask, some jerk will call you a dumb ass for asking.
There are all kinds of "spreads," i.e., differences, that are traded. There are equity price spreads between two related stocks that typically move parallel to each other. There are interest rate spreads between two related interest bearing instruments, there are futures spreads between contracts with different expiration dates, there are "calendar spreads" between prices of options with different expiration dates, Bla Bla Bla. Any difference you can think off is a spread, and any difference you can think of that might widen or narrow is a candidate for a spread trade. You could also go long one instrument and short another related instrument. That's another kind of difference, the difference between long and short. Each spread trade represents an equal opportunity event to lose money.
So "spread" by itself, and taken out of context, is just as useful as another word from traders jargon, "liquidity." Liquidity use to mean the ease with which you could buy or sell a financial instrument. If there were lots of buyers or seller, we would say that instrument, stock, bond, whatever, is "liquid." Nowadays, however, the word "liquidity" has become more of an all purpose word useful whenever vagueness is called for -- "the fed is injecting liquidity", etc. Just pepper your conversation with the words "spread" and "liquidity," and you'll sound knowledgeable to someone.
If you wasted your time by reading this far, than you probably want to know what my point is. It's this. Whenever we use jargon, if we are truly interested in communicating, we ought to be clear. Please don't say, "I am trading option spreads." Say instead, i'm trading option expiration spreads," or whatever, but be clear.
Gentlemen light your flame throwers.
I want to point out that the word "spread" is traders' jargon for the word "difference." Every time a trader uses the word "spread," we, as intelligent, educated human beings, can replace it in our minds with the word "difference." So, for example, the bid-ask spread, becomes the bid-ask difference. Subtract the bid from the ask and you have the difference or "the spread". If a trader says, "I'm trading the spread," he is trading a difference. Between what, who knows? You either have to tell from the context of the conversation, in which case you must fall back on your experience, or else you'll have to ask. If you have to ask, some jerk will call you a dumb ass for asking.
There are all kinds of "spreads," i.e., differences, that are traded. There are equity price spreads between two related stocks that typically move parallel to each other. There are interest rate spreads between two related interest bearing instruments, there are futures spreads between contracts with different expiration dates, there are "calendar spreads" between prices of options with different expiration dates, Bla Bla Bla. Any difference you can think off is a spread, and any difference you can think of that might widen or narrow is a candidate for a spread trade. You could also go long one instrument and short another related instrument. That's another kind of difference, the difference between long and short. Each spread trade represents an equal opportunity event to lose money.
So "spread" by itself, and taken out of context, is just as useful as another word from traders jargon, "liquidity." Liquidity use to mean the ease with which you could buy or sell a financial instrument. If there were lots of buyers or seller, we would say that instrument, stock, bond, whatever, is "liquid." Nowadays, however, the word "liquidity" has become more of an all purpose word useful whenever vagueness is called for -- "the fed is injecting liquidity", etc. Just pepper your conversation with the words "spread" and "liquidity," and you'll sound knowledgeable to someone.
If you wasted your time by reading this far, than you probably want to know what my point is. It's this. Whenever we use jargon, if we are truly interested in communicating, we ought to be clear. Please don't say, "I am trading option spreads." Say instead, i'm trading option expiration spreads," or whatever, but be clear.
Gentlemen light your flame throwers.
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And all points in between. This is nice because every client has a different risk tolerance threshold and will start with different account capitalization. 
