Credit Spread Option
/ˈkrɛdɪt sprɛd ˈɒpʃən/
Definitions
- (n.) A financial derivative contract granting the right, but not the obligation, to receive a payoff based on changes in the credit spread of a reference entity.
The investor purchased a credit spread option to hedge against widening credit spreads.
Forms
- credit spread option
- credit spread options
Related terms
See also
Commentary
Credit spread options are specialized derivatives used primarily in credit risk management; precise terms depend heavily on underlying credit instruments and market conventions.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.