TY - JOUR T1 - Applications of FX Derivatives in Active Currency Risk Management JF - The Journal of Derivatives DO - 10.3905/jod.2022.1.157 SP - jod.2022.1.157 AU - Frank J. Fabozzi AU - Suprita Vohra Y1 - 2022/03/21 UR - https://pm-research.com/content/early/2022/03/21/jod.2022.1.157.abstract N2 - Risk managers exhibit heterogeneous behavior as well as shortfall aversion, money illusion, and regret risk when managing portfolio risks. Foreign exchange options provide a flexible risk/return profile that is more likely to achieve such specific investment as well as behavioral objectives. We showcase five practical applications for international currency managers in selecting the appropriate hedging and active strategies for portfolio risk management. These solutions address a wide range of behavioral needs such as regret risk, shortfall aversion, positive skewness, and the increasing need for non-monetary satisfaction in the form of well-being utility. ER -