“BICs four Derivatives”, Newtonian or Einsteinian Revolution for Derivatives Analysis and Markets?

New York, NY (PRWEB) December 7, 2004

A new concept in derivatives pricing, hedging and trading referred to as BICs (Basis Instruments Contracts) appears to be the most important theoretical and practical contribution to derivatives analysis given that the Black Scholes analysis or even considering that economic mathematics pioneer Louis Bachelier.

A assessment on the http://www.4bics.org website reads: “I wanted to say this is Economics Nobel prize and/or Mathematics Fields Medal material, but that would be presenting this at a discount” RM, New York.

In a release of two book sets titled BICs four Derivatives Vol. I: Theory &amp BICs four Derivatives Vol. II: Applications, an author named Obi-Wan Yoda with a bio in the continuation of the Star Wars sequel makes the case.

The BICs analysis provides a compellingly valuable and exhaustive redefinition of derivatives and trivializes or sidelines existing approaches for derivatives pricing and hedging, which includes PDE/PIDE strategies, binomial/trinomial trees or Monte-Carlo.

The BICs analysis also provides a new method for derivatives hedging. In markets were BICs are traded, static hedges of any derivatives contract may possibly be obtained. When BICs in a BIC basis are not obtainable, the BICs analysis still provides compelling cross-hedging methods in a measurably a lot more efficient manner than current “Greeks” based hedging methods.

Establishing BICs markets would represent for established derivatives exchanges or trading venues, a significant growth chance, as they would represent the ultimate solution for end-users danger management needs.

The advent of BICs would substantially decrease the cost of derivatives hedges, consequently substantially improving the competitiveness of companies that use them. For accounting purposes, it would also bring a lot more transparency to the manner in which corporate assets and liabilities, in specific derivatives, are marked to marketplace. Far more particularly, compliance with FAS 133,138 and its implementation directives will turn out to be a lot more transparent.

In an environment where derivatives miscounting scandals often shake the extremely existence of some of the world’s largest businesses, this is indeed a compelling development.

More info on BICs, such as excerpts of the BICs books, summaries, table of contents and ordering details can be obtained at: http://www.4bics.org.

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