Five Against Bond Spread - FAB

AAA

DEFINITION of 'Five Against Bond Spread - FAB'

A spread in the futures markets created by taking offsetting positions in futures contracts for five-year treasury bonds and long-term (15-30 year) treasury bonds.

INVESTOPEDIA EXPLAINS 'Five Against Bond Spread - FAB'

A FAB spread is created by either buying a futures contract on five-year treasury bonds and selling one long-term treasury bonds or vice versa. Investors speculating on interest rate fluctuations will enter into this type of spread in hopes of under or overpriced treasuries.

RELATED TERMS
  1. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with ...
  2. Treasury Note

    A marketable U.S. government debt security with a fixed interest ...
  3. Spread

    1. The difference between the bid and the ask price of a security ...
  4. Cash Commodity

    In futures trading, the cash commodity is delivered for payments. ...
  5. Yield Curve

    A line that plots the interest rates, at a set point in time, ...
  6. Cheapest to Deliver - CTD

    In a futures contract, the cheapest security that can be delivered ...
Related Articles
  1. Advanced Bond Concepts
    Bonds & Fixed Income

    Advanced Bond Concepts

  2. Futures Fundamentals
    Insurance

    Futures Fundamentals

  3. All About Liquid Commodities
    Options & Futures

    All About Liquid Commodities

  4. What You Need To Know About Preferred ...
    Trading Strategies

    What You Need To Know About Preferred ...

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center