| Dictionary, Encyclopedia and Thesaurus - The Free Dictionary 1,726,551,568 visitors served. |
|
Dictionary/ thesaurus | Medical dictionary | Legal dictionary | Financial dictionary | Acronyms | Idioms | Encyclopedia | Wikipedia encyclopedia | ? |
Credit Spread |
Also found in: Wikipedia | 0.01 sec. |
|
Credit spread Applies to derivative products. Difference in the value of two options, when the value of the one sold exceeds the value of the one bought. One sells a "credit spread." Antithesis of a debit spread Related: Quality spread.
Credit Spread What Does Credit Spread Mean? (1) The spread between Treasury securities and non-Treasury securities that are identical in all respects except for the quality rating. (2) An options strategy in which 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 yields on Treasuries are lower than the yields on single A-rated industrial bonds because the Treasuries are backed by the full-faith and credit of the government and are rated higher; the Industrial bond is not. (2) An option credit spread 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. This also can be called a credit spread option or credit risk option. Related Terms: How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
|
| ? Mentioned in | ? References in periodicals archive | ||
|---|---|---|---|
| separately, marveled at the way credit spreads failed to widen out as the losses were quickly absorbed. And, as credit spreads widen, they impact equities, fixed income, and most hedge fund strategies. Due to the mixing, the increased size of transactions and the maturing of the pooled funding product, weighted average credit spreads for insurance companies have dropped by approximately 50 basis points (0. |
| Financial Dictionary |
| Free Tools: |
For surfers:
Free toolbar & extensions |
Word of the Day |
Help
For webmasters: Free content | Linking | Lookup box | Double-click lookup | Partner with us |
|---|