Shorting Bonds, Bond Spreads

Discussion in 'Trading' started by enkidu, Feb 8, 2008.

  1. enkidu


    Hey getting a little confused about “shorting” bonds. So I’m reading this book on fixed income, and the guy is talking about spread trading. And he says that you buy a bond and short another (make sense). However, what doesn’t make sense is that he is treating it like options!

    He keeps on talking about “proceeds” from the short. For example, pg. 340, “This trade generates cash because the short sale proceeds exceed the long buy purchase funds…”

    Maybe I’m missing something here. I just assume that for short sales, you PAY money to take a short position. And for options, yes, you can SELL options, but selling isn’t the same thing as short selling right?? He implies that you actually GET money when you short/sell a bond…

    Anyone knows how shorting/selling a bond works??? Anyone trade bonds?
    Anyone know a good online broker for bond trading?