So I currently work at a sell side bank in Stamford, came from a Natgas market making hedge fund down the street. For those who know me, currently waiting to leave for the military but I still have a passion for trading and had a few questions in regards to STIRS, specifically, Eurodollar. So I spoke to a trader and I couldn’t wrap my head around this.
Say I’m bearish, why would you BUY EDZ5-H6 spread? Won’t the front have more beta? And this being ED, the pricing is essentially 100 - 3mo Libor, so it should be inverse.
Second, when you’re long a year fly, why are you actually long four 6mo flies. In case this is a EDM0 6mo, aren’t you essential long F0-M0 spread and short M0-Z0 spread? Where does the go flies come from?
Sorry typo in my last sentence.
Forget the EDM0 6mo remark. Just want to know why a one year fly is essentially four six month flies.
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