• The credit spread reflects the difference in yield between treasury and corporate bonds with the same maturity.

  • Bond credit spreads are often a good barometer of economic health - expanding (bad) and contracting (good).
  • Credit spread can also refer to an option strategy in which a high premium option is written and a low premium option is bought on the same underlying security.
  • The credit spread option strategy should result in net credit, which is the maximum profit a trader can make.