We'd like to offer a product in which a notional amount $(N)$ is given, and the underlying is spread $(s)$ defined as, say, 30Y yield minus 10Y yield (both from treasury YTM yield curve). At the end of the trade, we give the client $N \cdot(s_t-s_0)$ in exchange for a transaction fee equal $N$ times some bps.
How can I hedge my position?
More detials: our product is likely to be casted into a total return swap (TRS) form. And we also offer early termination option but based on mutual negotiation and usually incur a punishiment fee for client if it happened(i.e., makewhole). Another termination condition is when the spread is moving in opposite direction, e,g, if the investor makes a bet the spread will widen, but it siginificantly narrows after entering the contract, then we will early terminate (or asking for more collateral, but I guess the design of such is again based on the hedging part).