For the LTCM case, we say that they buy 29.5 year bond and sell 30 year bond. What do you mean by buying 29.5 y bond? If they buy the bond, when will they sell them?
To my understanding, it is just shorting the 30 year bond.
Borrow 30 year bond - sell it - wait for 0.5 year - buy that 29.5 y bond from the market and return it back to to the borrower.
Am i right?