Abstract: The present invention relates to a process for designing, creating and distributing financial instruments which allow investors to trade flex short term interest derivative contracts that can be customized to meet its investor's needs by choosing the actual terms of the contract from a list of flexible features that include but are not limited to strike prices, start and expiration dates or option pay-out styles. The designed investment vehicle would provide a relatively inexpensive choice to investors looking to hedge specific exposures to the movement of short term interest rate indicators in an exchange-listed environment. The result of this functionality benefits the customers and brokerage firms in the sense that the contracts proposed in the present invention are an attractive hybrid of listed and OTC markets, offering the best of each.

Abstract: A method for creating, marketing, and selling a contractual instrument for protecting a value characteristic of a homeowner's residential real estate property is provided according to the invention. The derivative instrument can be created in the form of a simple contract like a “Home Equity Protection Product” sold to the homeowner by a mortgage originator or P&C insurer. It provides a cash-settled payout to the buyer at a predetermined expiration date defined by the contract correlated to, e.g., the home's market value or home equity value, and a reduction in value of a benchmark real estate index between, e.g., the contract purchase date and the expiration date. The Home Equity Protection Contracts of the present invention may be securitized much like mortgage-backed securities on a secondary and sold to institutional investors to permit them to speculate in the value of residential real estate in order to broaden their investment portfolios.