Hedge fund taps butterfly on Main

By Hazel Sheffield
11 Nov 2014

A London hedge fund has put on a butterfly trade based on the iTraxx Main three to seven year section of the yield curve, going long risk at the five year point, and short risk the three and seven year points, to play the recent divergence between the three-five-seven year butterfly and the market levels.

The trade was recommended by Pierre Yves Bretonnière, credit strategist at BNP Paribas in London, who said that real money investors were also showing interest. Bretonnière said the divergence was due to the three-five year part of the curve repricing steeper in the bearish leg of the market, ...

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