The article discusses how derivatives on credit risk, introduced by the International Swap Dealers Association in 1992, are priced. The instruments are evolving, and the article presents a framework to understand them. The price of a credit risk option is the expected future value of a put option on a risky bond with an adjusted exercise price. By using a stochastic strike price, credit risk can be separated from the total risk of the bond. This framework helps in trading and hedging credit risk.