lovederfish

Option-adjusted spread (OAS) is the yield spread of a fixed income instrument that is not attributable to embedded options. For example, a callable bond might be trading at a spread to Treasuries of 200 basis points. Of that, 60 basis points might be attributable to the bond's call feature, with the remaining 140 basis points attributable to such factors as the bond's credit risk, liquidity, etc. For this bond, the option-adjusted spread is 140 basis points.

http://www.riskglossary.com/link/option_adjusted_spread.htm