Funds eye long equity, short credit trades via options

By Hazel Sheffield
14 Oct 2014

Hedge funds are looking at going long equity and short credit by buying at-the-money Eurostoxx 50 calls and selling iTraxx Main receivers, in a bid to target equity outperformance in a bullish market.

Last week, Pierre-Yves Bretonnière, relative value strategist at BNP Paribas in London, recommended investors sell €100 mn of iTraxx Main receivers at 62.5bp with a December expiry, for 19.3c, and buy €7.4 mn of Eurostoxx 50 3100 calls also with a December expiry for 80.8bp, ...

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