1. HedgeFinder is now able to recommend specific puts to buy in order to hedge your portfolio. Optionally, it can also recommend a call credit spread that you can use to help offset the cost of the puts. With the click of a button the recommended hedge can be sent to the Matrix of the selected beta/delta base (the index or ETF that you have selected to represent your portfolio). Before using HedgeFinder to recommend a hedge, it is important that you have recently updated the Matrix of the selected beta/delta base so that the program is working with fresh prices.

If your portfolio is already hedged with a current position in the options of the beta/delta base when you open HedgeFinder, it will recognize your existing hedge and include it in the analysis. If you want HedgeFinder to recommend a possible additional hedge to use, just go ahead and click Find Hedge and follow the steps. If you want HedgeFinder to recommend a hedge in lieu of your existing hedge, first click the Remove Existing Hedge button, then click Find Hedge and follow the steps.

The HedgeFinder window works like the Graphic Analysis window in the way that it accumulates cases. With two or more cases accumulated, use the yellow arrow buttons to move back and forth through the cases. For instance, if you open HedgeFinder when you have a portfolio with an existing hedge, the first case displayed represents your portfolio with the existing hedge. If you then click the Remove Existing Hedge button, the window creates an additional case representing your portfolio without the hedge. You now have two cases and you can jump back and forth between them, viewing one or the other. If you then ask HedgeFinder to recommend a hedge, a 3rd case will be created representing whatever was on the screen at the time plus the recommended new hedge. As in Graphic Analysis, the red X button can be used to throw a case away.

Unlike the Graphic Analysis window, the HedgeFinder window is shown modally – meaning you must finish using it and close it before you can do anything else. Also, the Close button instantly closes this window instead of minimizing it.

2. In Account Status, we added several new beta/delta bases to the five that were available before. The new ones are as follows: The iShares MCSI - EAFE (EFA), the Mid-cap 400 (MID), SPDR 500 (SPY), iShares LEH 20 TBond, (TLT), and the Gold/Silver Index (XAU). With a total number of 10, this should make it easier to find an appropriate base that matches your portfolio. To accomplish this expansion, the program reads a new BDB file called Beta2.DTA that holds the additional data. Also in this file we have begun to supply R-squared numbers. Every beta now has an R-squared number that goes with it. R-squared (R2 for short) is a number between 0 and 1.0 that indicates how reliable the beta number is. For example, relative to the SPX, Citigroup (C) stock has a beta of 1.31 and an R2 of 0.60. Its 1.31 beta indicates approximately 31% bigger price swings relative to the market and the R2 of 0.60 indicates that the beta is fairly reliable. In contrast, while EBAY’s beta of 1.60 indicates approximately 60% bigger price swings relative to the SPX, its low R2 (0.34) gives us an indication that beta could be unstable, meaning that its beta has the potential to change quite a bit from its current level.

A weighted average of your portfolio’s R2 is now displayed in the top section of Account Status along side the portfolio Beta. A high portfolio R2 is good indication that you have selected an appropriate beta/delta base for your portfolio. In fact, while we used to say that a portfolio beta near 1.00 was the best way to tell that you have selected a good beta/delta base, now that R2 is here we are saying that you should pay more attention to maximizing R2. To assist in selecting the beta/delta base with the highest R2, we have made it so the drop-down list displays your portfolio’s weighted average R2 number next to each available beta/delta base. Note that for this to work, each beta/delta base that you care about needs to be quoted in the Quotes Display.

Note that with the addition of the SPY, there are two items in the list of beta/delta bases that represent the same thing – the S&P 500. You should see that every asset’s beta and R2 will be the same relative to the SPY as to the SPX. Between the SPY and the SPX, you should select the one you intend to use for hedging purposes. Since the SPY is one tenth the size of the SPX, when you select the SPY you will see that your portfolio delta is 10x greater – indicating that you are going to use approximately 10x as many SPY options as you would SPX options. Generally, small portfolio holders will want to use SPY options for more precise hedging and finer control. Larger portfolio holders might find that the SPX options are more appropriate.

3. With R2 and other data representing tracking error now available through the BDB, HedgeFinder now displays your portfolio’s tracking error relative to the currently selected beta/delta base. The light-blue shading around the performance line represent a single standard deviation (encompassing 68%) potential fluctuation in the value of your portfolio.

4. Candlestick charting has been added as an option in Price Charts. To switch to candlestick charting (and then back to bar charting) just click the new button in the Price Chart window that contains an image of candlesticks. Also, the Profit Zone feature was enhanced to display various shades of green and red. The deeper the green the greater the gain; the deeper the red the greater the loss.

5. Every summer the exchanges convert the LEAPs that have less than a year of remaining life into listed options. This happens in three consecutive months. Stocks on cycle 1 are taken care of in May, while cycle 2 stocks are taken care of in June and cycle 3 stocks are taken care of in July. Each month the changeover happens on Monday of expiration week. Options that change from LEAPs into listed options experience a change of symbol, and that has been a source of frustration for OptionVue 5 users because it has meant having to manually change the options definitions as well as the symbols for some individual transactions in the T.Log. With this release, we have made it so OptionVue 5 recognizes when it’s time for the changeover and automatically takes care of everything for you.

6. We made it so positions from separate accounts are not grouped when viewing the Status of a super account.

7. Clicking the corner X button to close the Graphic Analysis used to do the same thing as clicking the “Close” button – it caused the Graphic Analysis window to minimize. We changed it so clicking the corner X now actually closes the window. Now, instead of having to click the red X button followed by the Close button, you can close the window with a single click of the corner X button.

8. In the Account Status window, we eliminated the Cancel button because there is seldom a need to leave the window and abandon any changes. The “OK” button has been changed to a “Close” button. If you ever do need to leave the Account Status window and not save changes, you can click the corner X button and respond “no” to the save question. (This works just like the Matrix.)

9. In the T.Log, when entering the withdrawal of a stock or physical commodity, we no longer require that you enter a price or net dollar amount for the transaction. That is because when a stock or commodity is withdrawn, it simply disappears as far as the software is concerned. So there is no realized gain or loss to be accounted for.