Ok, just ran this page 317 passage by a couple FI traders/PMs Here is what I was told: "By buying CDS you are going short the underlying. Its like a protective put. " (DUH, WE ALL KNOW THIS. THEY MUST THINK I’M DUMB) “In reality, you are long a contract that is similar to a put, but no one uses the long/short terminology to refer to the contract itself. Everyone just refers to the buyer or seller when it comes to CDS” I still agree that the CFAI text should say: “Buy a five-year British American Tobacco bond at LIBOR plus 60 bps ** AND SHORT THE BOND BY PURCHASING ** five-year CDS at 46 bps”
Thanks for clarification.