credit spread option

Definition of "credit spread option"
  1. A type of option that provides a return based on the difference in borrowing costs between a specific borrower's debt and Treasury debt with a comparable maturity term
How to use "credit spread option" in a sentence
  1. The investor decided to buy a credit spread option to hedge against the risk of the company defaulting on its debt.
  2. The credit spread option provided a way to profit from changes in the company's creditworthiness.
  3. Due to anticipated market volatility, the trader shorted a credit spread option to protect his portfolio.

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