Unhedgeable risks must earn a return suitable to an ongoing risk-taking activity. Adjust performance measurement for sold options and risks taken. No-one will take option valuation or risk assessment seriously unless their compensation is tied to the value of options they give away and the risks they take. Marketers should be held to the standard of profitability after adjusting for options and risk. An ironic ending After following these three steps, you will find it is impossible to do business.
Ignorance is blissful while it lasts.
These types of losses cannot be made up in volume. If you do deals, you may win big if options are unexercised, but will lose big if options are exercised. If you don't do deals, you minimize your losses, but you're out of the game and have no chance at all to win. The more we know the value of these options and the size of these risks, the less willing we will be to give them away. Clients will appear to suffer in the short run by paying higher prices for power, but they will benefit in the long run by purchasing power and options from financially strong firms capable of delivering according to their promises.