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OHC Trade Room · Reference

OHC glossary

Every term used across the OHC Trade Room courses, defined the way we teach it. No external definitions are substituted.

terms
553
categories
10
source modules
12

553 terms A–Z

Fixed Income Advanced

Cap spread

Buying an interest rate cap and selling a higher-strike cap to reduce the net premium, creating protection over a defined band of rate moves. Protection stops at the upper cap, so it is a cost-versus-coverage trade. In the Module 3 case study a cap spread hedges $932m for $4.39m of premium.

Taught in
Module 3 — Fixed Income →
Level
Advanced — assumes working knowledge