Oas stock options. Looking back to 5 days ago, Oasis Petroleum Inc. (NYSE: OAS) priced a share secondary stock offering at $ per share. Buyers in that offering made a considerable investment into the company, expecting that their investment would go up over the course of time and based on early trading [.

Oas stock options

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Oas stock options. Get free option chain data for OAS. Find Call and Put Strike Prices, Last Price, Change, Volume, and more for Oasis stock options.

Oas stock options


The option-adjusted spread OAS is the measurement of the spread of a fixed-income security rate and the risk-free rate of return , which is adjusted to take into account an embedded option. Typically, an analyst uses the Treasury securities yield for the risk-free rate. The spread is added to the fixed-income security price to make the risk-free bond price the same as the bond.

By separately analyzing the security into a bond and the embedded option , analysts can determine whether the investment is worthwhile at a given price. A bond's yield to maturity YTM is the yield on a benchmark security, which can be a Treasury security with a similar maturity plus a premium or spread above the risk-free rate to compensate investors for the added risk.

The analysis gets more complicated when a bond has embedded options. These are call options, which give the issuer the right to redeem the bond prior to maturity at a preset price, and put options that allow the holder to sell the bond back to the company on certain dates. The OAS adjusts the spread in order to account for the potential changing cash flows. The OAS takes into account two types of volatility facing fixed-income investments with embedded options: The shortfall of this approach is that estimates are based off of historical data but are used in a forward-looking model.

For example, prepayment is typically estimated from historical data and does not take into account economic shifts or other changes that might occur in the future. The OAS should not be confused with a Z-spread. The Z-spread is the constant spread that makes the bond's price equal to the present value of its cash flow along each point along the Treasury curve. However, it does not include the value of the embedded options, which can have a big impact on the present value.

OAS is particularly useful in the valuation of mortgage-backed securities. In this sense, the prepayment risk is the risk that the property owner may pay back the value of the mortgage before it is due. This risk increases as interest rates fall. A larger OAS implies a greater return for greater risks.

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