Domestic Payoff: Asymmetric Power Put 1 Formula: Hd = max (Xd - Sd^T, 0) Xd = 2; T = 0...5

Foreign Payoff: unidentified

As can be concluded from this example, in the case of non-linear payoffs, PAT becomes an invaluable tool for identifying financially equivalent foreign payoffs. Although we can't always identify the shapes of financially equivalent foreign payoffs as something widely known and tradable, it is clear that for the sake of both risk management and trading purposes, being able to quickly and accurately identify financially equivalent foreign counterparts is essential. For traders, this could be used to detect and avoid arbitrage positions which, after research, turn out to be very risky non-arbitrage positions instead. For risk-management professionals, this technology could help avoid hedging positions which, after careful analysis, turn out not to hedge the position at all.