It stands for fair value spread; with respect to futures contracts, it is the difference between the fair value (FV) and the current market price of a future contract. This spread can be used to identify potential arbitrage opportunities or mispricing situations in the market. A positive spread indicates cash and carry arbitrage opportunities, while a negative spread implies otherwise- i.e., reverse cash and carry arbitrage opportunities.

In a different context, specifically in n relation to credit derivatives (credit default swaps, CDSs, and other similar products), it is the average of the single-name CDS spreads (CDS spread for a single name) for all the constituent names in the CDS index, weighted by probability of default (PD). The fair value spread is the starting point for calculating the market spread (real spread/ intrinsic spread). The fair spread has to be adjusted using a flat credit curve. This measure is also known as the theoretical spread.