A market quote is not a single price. It is continuously published as two numbers: the bid and the ask. The bid is the highest price any buyer in the order book is currently willing to pay for a security. The ask, often called the offer, is the lowest price any seller is willing to accept. The difference between the two is the bid-ask spread.
Why the spread exists
Buyers want the lowest possible price and sellers the highest, so the best price on offer normally sits above the best price bid, and a trade happens when one side accepts the other's price. Market makers and other liquidity providers keep both sides quoted by standing ready to buy at the bid and sell at the ask, and they earn the spread in exchange for letting others trade on demand. The spread compensates them for inventory risk, the chance that prices fall while they hold shares or rise while they are short, and for adverse selection, the risk of trading against participants who are faster or better informed.
What widens or narrows the spread
The width of the spread depends mostly on liquidity, trading volume, and market conditions. In heavily traded large-cap stocks, millions of shares change hands each day among many competing participants, and the spread is often a single cent. Several factors widen it. Small-cap and lightly traded securities have fewer participants and thinner order books, where the spread can reach several percent of the price. Volatility widens spreads too: when prices swing quickly, market makers quote further apart to protect themselves from sudden adverse moves. Pre-market and after-hours sessions have lower volume and fewer institutional participants, so the same stock usually shows a wider spread than during regular hours.
During sudden market stress or major announcements, liquidity providers often pull their resting orders or quote wider, which raises the cost of trading precisely when many participants want to trade.
How this shows up on Investment Bets
Investment Bets records a single price for each bet, not a bid and an ask, so no spread is paid on the way in or out. Opening and closing a bet at an unchanged price costs nothing, where a real round trip that bought at the ask and sold at the bid would lose the spread. The gap matters most where spreads are widest: a bet on a thinly traded stock, or one placed in pre-market or after-hours trading, is recorded at the latest available price even though a real order at that moment could have filled noticeably worse.