To overthrow the entrenched position that Black Scholes Merton occupies in the financial system, ArbTech is pursuing a multi-step strategy involving the following:
STEP 1: Creative Destruction
ArbTech and its creative ally t.Rutt™ are deploying unconventional tools such as artwork and literary products to break down the legitimacy of the Black Scholes Merton pricing regime. ArbTech’s use of novel symbols and communication methods is critical for defeating the overpowering abstraction and mathematical machinery that BSM uses to protect its dominant position.
STEP 2: Profit Motive
ArbTech believes that embedded fallacies in the Black Scholes Merton framework have created a multi-trillion dollar pricing inefficiency. This is articulated by t.Rutt as an Infinity Tax™ that is buried in the inflated hedge ratios generated by BSM’s false arbitrage boundary conditions. Products like ArbTech’s Expirationless Options™ will enable the risk capital community to reap large trading profits from the process of removing Black Scholes Merton and the Infinity Tax from the financial system.
STEP 3: Financial Integrity
ArbTech’s goal is to help financial markets achieve greater stability by improving the integrity of price communication and hedging practices between derivatives markets and cash markets. This requires the elimination of the current arbitrage boundary conditions as they were incorrectly fabricated by Black Scholes Merton in 1973. The market prices for ArbTech’s Expirationless Options (branded as XPO™) will enable financial markets to establish the correct arbitrage pricing boundaries that markets have lacked for over 40 years. ArbTech’s XPO™ markets will simplify derivatives markets while also bringing new integrity to the way in which information flows between cash and derivatives markets.
STEP 4: New Financial Metrics & Better Financial Risk Management
The legacy of ArbTech’s elimination of Black Scholes Merton will be new financial metrics and better tools for risk management. ArbTech’s XPO Puts™ will create new and less expensive strategies for financial risk management. ArbTech’s XPO Calls™ will create new ways for investors to gain tailored and leveraged exposure to price movements without incurring the liability of margin or the risk of expiration with expiring options. The trading and price discovery from more sophisticated XPO trading strategies such as collars, conversions and reversals will provide critical information and price stability for financial markets.