Credit default swaps entail the insurance of the buyers credit or debt holdings; (e.g. ABS, or MBSs) in the eventuality of a default or other instance precluding remuneration by the seller in exchange for a consistent float payment. Thus, a CDS may be acquired to mitigate risk for securities, issues, and derivatives, or even speculate as to the future financial health of a company. Alternatively, investors often institute CDOs in conjunction with other financials derivatives and asset classes so as to regulate a portfolios delta, gamma, vega, or negate a present positive delta as it is a negative delta position and thus frequently implemented in addition to a long equity positions.
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