hanvinh

truongdv wrote:
Is that same as ” hey guy, i bought ABC stock because of low price, why should i hedge the long position ???” ?
whatever, forget it…
it’s not the same.  because when you buy MBS and hedge against interest rate move w/ 2 bond hedge, are playing for spread or relative returns. which is why it is in that part of the reading - next to relative value methodologies.
if you are long a stock you are long.  you would have to be long 1 stock of a pharma company and short the index against it to create some kind of paralell argument to the MBS.
and the reason why you don’t hedge spread, is because that is where you make the $$$…