TAKING HEDGING & RISK TECHNOLOGY

INTO THE 21ST CENTURY

DECISION HEDGING

Seamless and Scalable Risk Mitigation

In a market where traditional solutions are complex and resource-intensive, OptionX delivers a streamlined, efficient hedging solution designed for ease of use. Leveraging technology from the alpha/betting industry, our approach solves the hedging challenge with an innovative process that minimizes client resource demands.

Unmatched Simulation Speed and Accuracy

  • OptionX generates over 10,000 simulations per hedging query on demand with
  • This frequency provides a high degree of accuracy, delivering near-real-time insights that outperform traditional systems.

Unique Probability Surface

  • Tailored modeling of tail risk assumptions
  • Recognition of volatility bursts and resilience in stress scenarios
  • Pricing that adapts to both current and future market conditions

This empowers clients to make informed, data-backed decisions with a clear understanding of dynamic market environments.

Future market state

Comprehensive Market Dynamics Modeling

OptionX goes beyond standard FX rates and implied volatility, simulating real-world outcomes for specific hedge expiries with high fidelity. Key advantages include:

  • Incorporating tail risk for a realistic view of rare market events
  • Accounting for volatility fluctuations and stress scenarios to enhance resilience
  • Pricing based on an integrated view of present and future market states

Optimized Hedging Decisions for Long-term Value

OptionX delivers insights that help clients understand the true cost-benefit balance of their hedging strategies:

  • Align profit and loss distributions across time series
  • Optimize buy/sell decisions for every hedging instrument based on market state projections
  • Achieve positive expected future outcomes by focusing only on hedges where benefits exceed costs

This enables clients to build strategies with mathematically optimized, risk-adjusted value.

Core functionality

The OptionX backtest engine provides clients with a clear view of their past bottom line under alternate OptionX-powered hedging regimes.

  • Unmatched Historical Depth: Tests data going back over 20 years, enabling in-depth trade-by-trade analysis for both linear and non-linear hedging structures across currencies and primary metals.
  • Customized Strategy Measurement: Designed to measure any FX hedging strategy’s impact on a company’s bottom line, using customizable benchmark metrics to align with hedging policy objectives.
  • Data Integrity: Strictly adheres to historical timelines, preventing ‘look-ahead bias by only accessing data up to the specified end date (e.g., 2010-2015). This ensures accurate, time-bound calculations and reliable, real-world outcomes.

User-Controlled Parameters for Precision

OptionX back tests are easy to customize using parameters at helicopter-view level.

  • Select home currency and additional risk parameters.
  • Upload historical or simulated hedges across 400+ currency pairs.
  • Specify hedging structures for historical testing (vanilla, barrier, hedge ratio, forward, no-hedge).
  • Choose to benchmark against forward, spot at expiry, hedge ratio, volatility or create your own benchmark

Automatic, Insight-Rich Reporting

OptionX goes beyond standard FX rates and implied volatility, simulating real-world outcomes for specific hedge expiries with precision. Key advantages include:

  • Comprehensive Analysis of Hedging Program: Post-test, an automatic report quantifies if hedging benefits exceed costs.
  • In-Depth Metrics Provided: Report covers: Total costs, risk analytics, and comparisons (Volatility, VaR, CVaR) Hedging effect on EBITDA (if data provided), average hedge rates, and P&L outcomes.
  • Understand and Manage Uncertainty: Quantifies uncertainty, helping clients grasp the total costs vs. benefits balance in hedging.

Proven Value and Decision Clarity

OptionX delivers insights that help clients understand the true cost-benefit balance of their hedging strategies:

  • Extensive, Real-World Results: Verified by client references (under NDA), offering clarity and confidence in hedging decisions.
  • Tailored to Meet Client Needs: The engine’s outputs allow corporations to build hedging strategies that align with long-term financial objectives

5-step computational process

OptionX employs a powerful 5-step computational process for hedge optimization, designed to transform client input and risk parameters into actionable insights.

In just 40 seconds, OptionX leverages current market data, algorithmic processing, and extensive simulations to deliver a precise, quantified analysis. This rapid, sophisticated approach supports informed and strategic decision-making.

OUTPUT

✓ Real-time overlay and ranking of structures

✓ Adaptive Hedge Ratio

✓ Expected effective rate

✓ Optimal hedge decision

comprehensive performance tracking

  • Graphical analysis comparing hedge portfolios vs. forwards and spot prices at expiry
  • Portfolio breakdown of hedged currencies, offering full transparency into currency exposures
  • Real-time view of net current aggregated P&L across the portfolio
  • Worst-case cash flow projections, ensuring preparedness for adverse scenarios
  • Asymmetric, favorable projected cash flow for upside potential visibility

stress testing tools

Customized Currency Stress Tests: Choose trend currencies via dropdown to test performance against home or selected currencies

Projected Portfolio Outcomes Under Market Shocks

  • Short-term shocks of 5% for immediate stress responses
  • Annual adverse moves of 10%, annualized to hedge expiry across the portfolio
  • Global risk shock (e.g. 2008 crisis scenario with 20% impact, providing insight for extreme conditions

hedge accounting

  • Recognizing the complexity and cost of hedge accounting, we’ve built the dollar-offset and regression methods directly into our platform
  • Fully customizable time frames allow clients flexibility in aligning accounting periods
  • Simple upload functionality with one-click export to CSV, keeping hedge accounting efficient and cost-free

optionx portfolio tracker

Our Portfolio Tracker provides tools unmatched by other providers, giving clients an integrated, real-time view to maintain policy compliance.

  • Trade-by-Trade Analysis: Upload aggregated hedges for a detailed breakdown, with real-time tracking and assessment
  • Simulated Portfolio Testing: Upload simulated trades to assess their impact on overall risk
  • "No-Hedge" Feature: Implement partial or no hedging on certain trades, with customizable percentages for optimal risk balance
  • Real-Time Stress Testing: Test against home currency or any other via dropdown, allowing scenario analysis to align with specific policies