The Payoff Advantage Tool (PAT) introduced* in this document provides substantial benefits to business concerns with complex asset portfolios. These benefits allow a portfolio manager extended capabilities in defining financially equivalent strategies that enhance profitability and reduce risk. The benefits of PAT include, but are not limited to:

• Instant identification of new true arbitrage opportunities or alternate financially equivalent transaction pathways that are currently unseen.

• A screen for testing consistency in option pricing models.

• A unified framework for the management of an entire portfolio in a multi-asset market. This solves the ambitious task of monitoring the portfolio from the perspective of any one of the assets involved.

PAT is not an option pricing tool, it is a transform symmetry tool that immediately identifies financially equivalent payoffs on the opposite sides of a market for any payoff, no matter how complex. PAT works from the level of underlying symmetry between different markets, whether they are commodities, currencies, or any other assets. PAT technology is not based on statistics but on direct application of underlying symmetry relationships.

PAT and other physics based financial technologies extend the reach of market participants. They provide a dramatically better result. This is why in the near future physics based technologies will entirely replace the use of standard models for option pricing and portfolio management, while dramatically improving the accuracy of risk measurement and reporting.

___________________________________
*V. A. Kholodnyi and J. F. Price. Foreign exchange option symmetry based on domestic-foreign payoff invariance. In J. F. Marshall and R. J. Marks, editors, Conference on Computational Intelligence for Financial Engineering, pages 164-170. IEEE, 1997.

V. A. Kholodnyi and J. F. Price. Foreign Exchange Option Symmetry. World Scientific, River Edge, New Jersey, 1998.

V. A. Kholodnyi and J. F. Price. Foundations of Foreign Exchange Option Symmetry. IES Press, Fairfield, Iowa, 1998.