These are basic topics, but seems like they’re sometimes very similar. Simple tips about how to differentiate? When do you use each?
Never use nominal, z-spread for option free/free of prepayments structure and OAS for “with option”.
If the OAS is positive, that’s a good thing, even if the nominal is negative.
If OAS is negative and benchmarked against the treasury (risk free), that implies its overpriced.
If OAS is positive, you cannot simply assume its overpriced without more information (like comparing to an option free bond with the z-spread).
if term structure is flat then z-spread = nominal spread