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.
A horizontal spread is a simultaneous long and short position in derivatives for the same underlying asset and strike price, but with different expiration dates.
Boundary conditions were used to establish the minimum and maximum possible values of call and put options prior to the introduction of binomial tree and Black-Scholes pricing models.
Deep-in-the-money options have strike prices that are significantly above or below the market price of the underlying asset and thus contain mostly intrinsic value.
Delta hedging is an options strategy that aims to be directional neutral by establishing compensating long and short positions in the same underlying asset.
The extrinsic value is the difference between the market price of an option, also known as its premium, and its intrinsic price, which is the difference between the strike price of the option and the price of the underlying asset.