Active investor trading has brought about changes in the foreign exchange options market, leading to the revival of older – but still useful – concepts.
Over the past couple of years, drastic changes have taken place in how private investors view and influence the foreign exchange options market. It has gradually become a far better environment in which to control risk.
Specifically in FX, the options market used to be a buyer’s market. Big market-making houses were generally short vega (at-the-money options) and short volgamma (out-of-the-money options). This has changed and there is a direct and a more indirect reason for this revision.

Positive gains build up over the long term, just like the car driver who is going that little bit faster than the others on a lengthy journey.

Western European investors should look beyond the political risks of the Yukos affair, as Russia offers excellent opportunities, particularly in real estate.
Helped by both political stability and economic growth, Russia has been something of an investors’ heaven over the last year. But it remains important for investors to apply correct risk management filters.
On the political side, President Vladimir Putin introduced much-needed law and order, centralising power in the hands of federal authorities, reforming the legal system and bureaucracy.
Structural reforms are underway, with more emphasis on boosting competition and creating a better climate for foreign investors. The state is also introducing more transparent legislation and taxation systems.
Parliamentary and presidential elections in the coming winter and spring are not expected to bring many changes to Mr Putin’s vision, though foreign investors are likely to wait until a new government has been formed.

Simon Hildrey finds Asia Pacific to have recovered from its 1997-8 crises and to be less dependent on the US economy. Consequently the prospects for further growth look better than elsewhere in the world.

Simon Foxley writes on why providers should aim real estate investment vehicles at the wealthy. Despite the dramatic growth in the number and size of European real estate investment vehicles over the last few years, one group of investors seems to have been regularly overlooked – high net worth investors.

In this section of PWM we test the performance and volatility of two investment strategies using model portfolios. Each month we look at two distinct approaches – one global and one European.