Finite difference methods for option pricing are numerical methods used in mathematical finance for the valuation of options. Finite difference methods were first applied to option pricing by Eduardo Schwartz in 1977. Finite difference methods can solve derivative pricing problems that have, in general, the same level of complexity as those problems solved by tree … [Read more...]
Archives for March 2010
Monte Carlo option model
The Monte Carlo Option Model was developed to compute the exact value of a particular option using Monte Carlo Methods, as termed by Stanislaw Ulam. Designed by Phelim Boyle, this model was implemented for the first time in the year 1977 for the purpose of option pricing, which was applied for calculating the value of European options. A few years after, the model was also … [Read more...]
Free Stock Tips for 15th March 2010
The Various – Daily Stock Recommendation Given by the various analysts and Stock Brokers are : YES Bank Ltd. - Daily stock recommendation 15-03-2010 Source Action Tip Period Target Price (Rs.) Hemen Kapadia Buy, stop loss Rs 249 - 258.00 Steel Authority of India (SAIL) Ltd. - Daily stock recommendation 15-03-2010 Source Action Tip Period … [Read more...]
Binomial Options Pricing Model [Explained]
This model is an options valuation method developed by Cox, et al, in 1979. The binomial option pricing model uses an iterative procedure, allowing for the specification of nodes, or points in time, during the time span between the valuation date and the option's expiration date. The model reduces possibilities of price changes, removes the possibility for arbitrage, … [Read more...]
Black-Scholes Model Explained
The Black Scholes Model is one of the most important concepts in modern financial theory. It was developed in 1973 by Fisher Black, Robert Merton and Myron Scholes and is still widely used today, and regarded as one of the best ways of determining fair prices of options. The Black Scholes Model can be described as a model of price variation over time of financial instruments … [Read more...]