Today is called "Spy Wednesday" because the Gospel reading for today (cf. Mt 26:14-25) is about how Judas agreed to act as a spy for the Sanhedrin and hand Jesus over to them for 30 pieces of silver.

• 14 Then one of the twelve, who was called Judas Iscariot, went to the chief priests 15 and said, "What will you give me if I deliver him to you?" And they paid him thirty pieces of silver. 16 And from that moment he sought an opportunity to betray him.
  
  17 Now on the first day of Unleavened Bread the disciples came to Jesus, saying, "Where will you have us prepare for you to eat the passover?" 18 He said, "Go into the city to a certain one, and say to him, 'The Teacher says, My time is at hand; I will keep the passover at your house with my disciples.'" 19 And the disciples did as Jesus had directed them, and they prepared the passover. 20 When it was evening, he sat at table with the twelve disciples; 21 and as they were eating, he said, "Truly, I say to you, one of you will betray me." 22 And they were very sorrowful, and began to say to him one after another, "Is it I, Lord?" 23 He answered, "He who has dipped his hand in the dish with me, will betray me. 24 The Son of man goes as it is written of him, but woe to that man by whom the Son of man is betrayed! It would have been better for that man if he had not been born." 25 Judas, who betrayed him, said, "Is it I, Master?" He said to him, "You have said so."

A spy is someone who acts like he is trustworthy when all the while he is plotting to betray you. Judas did that when he said "Hail, Master!" and gave Jesus a kiss -- which is the greeting of a friend -- when really he was giving the chief priests the sign to arrest Jesus. He says, "Is it I, Lord?" as if he is innocent, but there is no one more guilty.

May we all be more like the beloved apostle, who stayed ever at the side of Christ throughout His Passion, and less like Judas, who betrayed the Lord for the price of a slave.

UPDATE (3-31-10): "Suburban banshee" (interesting s/n) left the following comment that I think is very helpful:

• It's not a new term; it's the English translation, which goes back to at least the 19th century, of an Irish term that goes back at least to the early 15th century.
  
  The translation is a bit shaky. "Ceadaoin in/an Bhraith" meant "Betrayal Wednesday". But "braith" also meant someone who observes or spies. (Two different verb rootwords, spelled and pronounced the same.) So Betrayal Wednesday was translated as Spy Wednesday.

Pax Christi,
phatcatholic