Deep learning is increasingly used in financial modeling, but its lack of transparency raises risks. Using the well-known ...

Learn about the volatility smile, a key concept in options trading that perplexes many investors, and how it impacts options ...

The valuation of financial derivatives continues to evolve, with option pricing models remaining a cornerstone of modern quantitative finance. Traditional frameworks, such as the Black–Scholes model, ...

Monte Carlo simulations have become a cornerstone in quantitative finance, particularly in the pricing of complex options and in modelling volatility dynamics. This numerical method employs random ...

Our method for call options is summarised in the following algorithm: (1) We device the time interval into the grid 0≡t_0<t_1<...<t_n≡T and let D_0,D_1...,D_n be some values for the underlying asset ...

Options derive their value from an underlying asset, typically a stock, and their price, known as the premium, is influenced by factors ranging from the present share price to the time left until ...

Option pricing is calculated using the Black-Scholes model, which takes four influential factors into account: the price of an underlying stock (assuming constant drift and volatility), an option’s ...

Implied volatility is a powerful but often misunderstood metric that plays a major role in options trading. Implied volatility doesn’t tell you what’s going to happen to an option’s price, but it ...