The Models of Option Pricing and Related Applications
Year: 2025
Type: article
Abstract: As the economic market becomes increasingly prosperous, an option is a financial derivative contract that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price on or before a specified expiration date. Moreover, options are traded on various assets, including stocks, indices, commodities, and currencies. Then, option pricing is a fundamental topic in the field of financial mathematics and quantitative finance, which focuses on determining the fair value of options. Accordingly, there can be many different methods for the pricing models, this essay focuses on different option pricing models and conducts detailed comparisons. The methods of theoretical and reality application to develop the research. Other pertinent factors have been duly taken into account, the Black-Scholes model takes a more accurate estimation than any Binomial Tree model. Also, many other models are more complete. In summary, the contribution the pricing models to the industries and economy boost inspired.
Author: Chenhui Mao
Institution: Xi’an Jiaotong-Liverpool University
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4412495355