Credit Spread
Definition of 'Credit Spread'1. The spread between Treasury securities and non-Treasury securities that are identical in all respects except for quality rating.2. An options strategy where a high premium option is sold and a low premium option is bought on the same underlying security. |
|
Investopedia explains 'Credit Spread'1. For instance, the difference between yields on treasuries and those on single A-rated industrial bonds. A company must offer a higher return on their bonds because their credit is worse than the government's.2. An example would be buying a Jan 50 call on ABC for $2, and writing a Jan 45 call on ABC for $5. The net amount received (credit) is $3. The investor will profit if the spread narrows. Can also be called "credit spread option" or "credit risk option". |
Directory (Option Strategy)
-
Alligator Spread
-
Atlantic Spread
-
Back Fee
-
Backspread
-
Bailard, Biehl And Kaiser Five-Way Model
-
Bear Call Spread
-
Bear Put Spread
-
Bear Spread
-
Bear Straddle
-
Box Spread
-
Bull Call Spread
-
Bull Put Spread
-
Bull Spread
-
Bullet Trade
-
Butterfly Spread
-
Buy A Spread
-
Calendar Spread
-
Call Ratio Backspread
-
Collar
-
Collar Agreement
-
Condor Spread
-
Contingent Order
-
Conversion Arbitrage
-
Covered Call
-
Covered Combination
-
Covered Straddle
-
Credit Spread
-
Death Put
-
Debit Spread
-
Delta Hedging
-
Delta Neutral
-
Delta Spread
-
Diagonal Spread
-
Dividend Arbitrage
-
Double One-Touch Option
-
Fence (Options)
-
Fiduciary Call
-
Fixed Dollar Value Collar
-
FMAN
-
Forex Hedge
-
Forex Option & Currency Trading Options
-
Form 6781: Gains And Losses From Section ...
-
Front Fee
-
Gut Spread
-
Heston Model
-
Horizontal Spread
-
Implied Volatility - IV
-
Interest Rate Collar
-
Iron Butterfly
-
Iron Condor
-
Leg
-
Leg Out
-
Long Jelly Roll
-
Long Leg
-
Long Put
-
Long Straddle
-
Long-Term Equity Anticipation Securities ...
-
Married Put
-
Modidor
-
Multi Index Option
-
Multi-Leg Options Order
-
Naked Call
-
Naked Option
-
Naked Position
-
Naked Put
-
Negative Butterfly
-
Net Option Premium
-
Neutral
-
Option Premium
-
Outright Option
-
Overwrite
-
Overwriting
-
Positive Butterfly
-
Protective Put
-
Put Calendar
-
Put On A Call
-
Put On A Put
-
Put Ratio Backspread
-
Put To Seller
-
Ratio Call Write
-
Ratio Spread
-
Reverse Calendar Spread
-
Reverse Conversion
-
Risk Reversal
-
Roll Down
-
Roll Forward
-
Roll Up
-
Seagull Option
-
Sell To Open
-
Series 4
-
Short Leg
-
Short Straddle
-
Straddle
-
Strangle
-
Swing Option
-
Synthetic Dividend
-
Variable Ratio Write
-
VIX Option
-
Writing An Option
-
Zero Cost Collar
-
Zomma
Related Definitions
Articles Of Interest
-
Options Trading With The Iron Condor
This options strategy allows your profits to soar in a sideways market. -
How To Manage Bull Put Option Spreads
Learn how to halt options losses when the market moves quickly in an unfavorable direction. -
S&P 500 Options On Futures: Profiting From Time-Value Decay
Writing bull put credit spreads are not only limited in risk, but can profit from a wider range of market directions. -
Vertical Bull and Bear Credit Spreads
This trading strategy is an excellent limited-risk strategy that can be used with equity as well as commodity and futures options. -
The Rise And Fall Of The Shadow Banking System
We look at the evolution, failure and fallout from the shadow banking system. -
Taking Advantage Of Volatility Spikes With Credit Spreads
Alert options traders can follow this strategy to improve their chances of success. -
Iron Condors: Wing It To Maximum Profit
Understanding the right way to execute an iron condor can increase potential returns and limit risk. -
Spreading The Word About Portfolio Margin
An underused opportunity provided in an SEC rule can enhance returns and lower risk for spread traders. -
How Interest Rates Affect The Housing Market
Understand how rate changes can affect home prices, and learn how you can keep up. -
Basic Investment Objectives
You might know about different asset types, but do you know how each type contributes to a particular goal?
Free Annual Reports