# Option-Adjusted Spread (OAS)

*Markets & Instruments — Finicade finance glossary*

Option-adjusted spread is the Z-spread after removing the value of any embedded option, so bonds with and without call features can be compared on credit alone. Computing it requires a model of rate paths — usually a lattice or Monte Carlo — which makes OAS the most model-dependent of the common spread measures. Two desks can quote different OAS on the same bond purely because their volatility assumptions differ.

**Also known as:** OAS, option adjusted spread

**Related terms:** [Z-Spread](https://finicade.com/glossary/z-spread), [Callable Bond](https://finicade.com/glossary/callable-bond), [Credit Spread](https://finicade.com/glossary/credit-spread), [Monte Carlo Simulation](https://finicade.com/glossary/monte-carlo), [Convexity](https://finicade.com/glossary/convexity)

Source: https://finicade.com/glossary/option-adjusted-spread