Overview
What is it:
The spread is the difference between an option's Strike Price and the current market price of the underlying stock, but it only exists when the stock price is above the strike price. It is the actual source of an option's value once it is In-the-Money.
Why does it matter:
Whether your options carry any value at all depends entirely on whether the stock price has risen above the strike price. Only once that spread exists does your unit count have something to multiply. A large grant with no spread (stock price is below strike price) has no value and is considered Out-of-the-Money.
What do people most often get wrong:
Some people assume a spread can be negative when the stock price falls below the strike price. There is no spread at that point, so the value of the option grant is zero. Until the stock price actually clears the strike price, no spread exists, and no unit count, however large, changes that.