TLDR
Credit spreads are the difference between corporate and government yields with similar maturities but different credit ratings. The higher the spread, the riskier the corporate bond. The relation between credit spreads and Treasury rates depends on the time horizon. Historically, credit spreads peak at the end of recessionary periods and recover along with growing government bond yields. There are two types of Credit Spread Option strategy: Buying Call (of Strike X) or Buying Bearish Credit Spread (of strike price), Buying PUTs of a particular strike price of a financial asset and buying strike numbers equal numbers of the greater strike price.via the TL;DR App
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Written by ikuchma | Financial Advisor
