01
The old way: hedge, drift, repeat
When an institution sells an option, it offsets the risk by holding a balanced position. The trouble is that this balance does not last. As the market moves, the hedge and the option drift apart, and the position must be adjusted — again and again, day after day. Each adjustment costs money. Over a year, across a large book, the bill runs into hundreds of millions. This constant re-adjustment is the standard practice, and almost everyone simply accepts its cost as unavoidable.
02
The insight: the market has a “handedness”
The risk in an option book lives on what traders call the volatility surface — a landscape that shifts and tilts as markets move. Our research into this surface uncovered a property we call chirality: a kind of handedness, the way your left and right hands are mirror images that can never quite be laid on top of one another. The surface leans one way or the other, and that lean carries information. Conventional hedging ignores it entirely — it treats the landscape as if it had no grain. Once you can see the handedness, you can see that most of the usual re-adjustment is wasted motion, fighting the surface instead of working with it.
03
RC: navigating with the grain
Our engine, RC, navigates that same landscape — but it reads the handedness and moves with the grain rather than against it. The result is the same protection, the same risk profile, held with far fewer and far cheaper adjustments.
The savings are substantial: on a large book, our estimates point to a reduction of roughly 40–50% of the annual hedging cost — money that today simply disappears into transaction after transaction. The typical hedging cost of a large investment bank is around $400 million to $600 million, giving an RC cost savings of $160 million to $300 million.
It works alongside existing systems, and positions never leave the institution’s own environment.
