What's the meaning of Credit Spread？

A credit spread is a financial strategy that involves selling one financial instrument while simultaneously buying another financial instrument with the same expiration date but a different strike price. The difference between the premiums received from selling the first instrument and the premiums paid for buying the second instrument is known as the credit spread. The goal of a credit spread is to generate income by collecting the difference between the premiums while limiting the potential losses. Credit spreads are commonly used in options trading, where they can be used to hedge against market volatility and minimize risk.