Right so it’s like a buying a put and writing a call at the same strike price then (assuming offsetting premiums)
In any event, I get the whole logic, it just interferes with my traditional understanding of buying a forward. For instance, I’m used to understand hedging as taking a position in the scenario you don’t want to happen. In that case, that adverse scenario is spread widening so you would be short the spread forward. If the spread widens, you lose on the position but gain on the forward because you can now buy the product at the wider spread (i.e. cheaper) and sell it at the tighter spread you contracted. The profit on the forward will then offset the loss on your cash position. If you messed up and the spread narrows, you’re purchasing the product at a tighter spread and contractually selling it back at a higher one. Whatever you made on your existing position is offset by that loss, so it’s symmetric. The whole issue is that my logic has the sale of the spread product forward accomplishing that protection, whereas it is rather described that one must be a buyer of the credit forward.
Since I’m studying for the CFA level 3 exam and I don’t intend on failing it, I will play nice on the exam and simply retain that in the very specific case of forwards, buying a credit forward is what one does to protect against widening and that it’s symmetric.And since we had that discussion, I will most likely remember that on the exam, so thank you very much!