credit spread option
- 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
- The investor decided to buy a credit spread option to hedge against the risk of the company defaulting on its debt.
- The credit spread option provided a way to profit from changes in the company's creditworthiness.
- Due to anticipated market volatility, the trader shorted a credit spread option to protect his portfolio.