Abstract: Methods for optimizing a portfolio having at least a long position portion and a short position portion are disclosed. One exemplary method includes developing a portfolio optimization strategy for the portfolio including: adjusting at least one investment in the long position portion of the portfolio, wherein the adjusting includes adding at least one investment to the long position portion of the portfolio, and executing an optimizer methodology on the short position portion of the portfolio in association with at least the adjusting of the investments in the long position portion of the portfolio. The exemplary method further includes performing at least one transaction in accordance with the developed portfolio optimization strategy; generating a notional basket of investments including a plurality of investments selected from the short position portion of the portfolio; and, entering into at least one swap arrangement based on the generated basket of investments.

Abstract: In one general aspect, the present invention is directed to methods that may comprise the step of a first party entering into at least one derivative contract with a second party. The derivative contract may provide the second party with a short position on a derivative portfolio including one or more securities. Also, the derivative contract may grant a transferable right to substitute individual securities included in the derivative portfolio. This right may be granted to either the first party or the second party, and the right to substitute may transfer between the first party and the second party under certain conditions. In various embodiments, however, only one of the first party and the second party may have the right to substitute at any one time.