Credit Spread

Dictionary Says

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 Says

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)

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  2. Atlantic Spread

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  3. Back Fee

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  4. Backspread

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  6. Bear Call Spread

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  7. Bear Put Spread

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  9. Bear Straddle

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  12. Bull Put Spread

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  13. Bull Spread

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  14. Bullet Trade

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  16. Buy A Spread

    Option strategy ...
  17. Calendar Spread

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  18. Call Ratio Backspread

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  20. Collar Agreement

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  21. Condor Spread

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  22. Contingent Order

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  23. Conversion Arbitrage

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  24. Covered Call

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  25. Covered Combination

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  26. Covered Straddle

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  32. Delta Spread

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  33. Diagonal Spread

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  34. Dividend Arbitrage

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  38. Fixed Dollar Value Collar

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  39. FMAN

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  40. Forex Hedge

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  44. Gut Spread

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  45. Heston Model

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  46. Horizontal Spread

    An options ...
  47. Implied Volatility - IV

    The estimated ...
  48. Interest Rate Collar

    An investment ...
  49. Iron Butterfly

    An options ...
  50. Iron Condor

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  51. Leg

    1. Term ...
  52. Leg Out

    One side of a ...
  53. Long Jelly Roll

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  54. Long Leg

    The part of ...

  55. Long Put

    An options ...
  56. Long Straddle

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  57. Long-Term Equity Anticipation ...

    Publicly traded ...
  58. Married Put

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  59. Modidor

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  60. Multi Index Option

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  61. Multi-Leg Options Order

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  63. Naked Put

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  66. Neutral

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    1. The income ...
  68. Outright Option

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  69. Overwrite

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    An options ...

  71. Positive Butterfly

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  72. Protective Put

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  73. Put

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  74. Put Calendar

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  75. Put Ratio Backspread

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  76. Ratio Call Write

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  80. Risk Reversal

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  83. Roll Up

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  84. Seagull Option

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  85. Sell To Open

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  86. Series 4

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  87. Short Leg

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  88. Short Straddle

    An options ...
  89. Straddle

    An options ...
  90. Strangle

    An options ...
  91. Swing Option

    A type of ...

  92. Synthetic Dividend

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  93. Variable Ratio Write

    An option ...
  94. VIX Option

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  95. Writing An Option

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  97. Zomma

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Related Definitions

  1. Corporate Bond

    A debt security ...
  2. Credit

    1. A contractual ...
  3. Premium

    1. The total ...
  4. Treasury Bond - T-Bond

    A marketable, ...
  5. Intermarket Spread Swap

    A swap ...
  6. Agency Bond

    A bond issued by ...
  7. Convertible Arbitrage

    An investing ...
  8. Liquidation

    1. When a ...
  9. Canada Savings Bond - CSB

    A financial ...
  10. Illiquid

    The state of a ...

Articles Of Interest

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  2. Option Spreads: Credit Spreads Structure

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  4. Vertical Bull and Bear Credit Spreads

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  8. The Rise And Fall Of The Shadow Banking System

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  9. Options Trading With The Iron Condor

    This options strategy allows your profits to soar in a sideways market.
  10. Advanced Bond Concepts: Term Structure of Interest Rates

    The yield curve is a common bond valuation method. Learn more about it here.

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