Spread

Spread means:
the difference between the fair market value of stock at the exercise date and the option price. Can be used in many contexts to denote the margins on financial transactions. For example, the spread of an option is the difference between the fair market value of stock at the exercise date and the option price. The amount paid by the employee for the stock, plus the taxable spread, becomes the basis. The appreciation above such basis is taxable as a long-term capital gain upon disposition of the stock.

See also Capital Gain in the American Legal Encyclopedia and Capital Gain in the World Legal Encyclopedia.