Trade Nivesh Default Value

Insurance or speculation?
Investors have traditionally used credit default swaps as a way to hedge against blowups in corporate bonds. Such derivatives can work as an insurance policy, increasing in value as the probability of a company defaulting on its obligations rise.

But holders of credit default swap indexes, however, benefit when the underlying corporate bonds gain in value as a result of their increased creditworthiness. Some investors see credit derivatives as an easier and cheaper way to bet on the performance of corporate debt, compared with owning the underlying bonds outright.