Comparison of American, European, and Exotic Options and Pricing Methods

DOI

10.2991/978-94-6463-408-2_36How to use a DOI?

Keywords

American Options; European Options; Exotic Options; Binomial Tree Model; Monte Carlo Simulations

Abstract

As a matter of fact, the valuation of options is a fundamental element of financial markets and investment in general especially in recent years. With this in mind, this study provides an overview and analysis of three commonly used options as well as the methods used to price them. To be specific, these options include the Binomial tree model, the Black-Scholes Model, and Monte Carlo simulations. Additionally, recent research on option pricing is presented, highlighting various aspects such as flexibility, pricing premiums, market predictability strategy, and investor suitability. At the same time, this study examines the constraints of existing research and identifies prospective domains for further study. According to the analysis, the main aim of this study is to introduce and contrast three different choices along with their respective pricing systems. In the meantime, it also aims to extend current research concerns and provide guidance to future researchers, which shed light on guiding further exploration of option pricing.

Copyright

© 2024 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Jiaxuan Wang
PY  - 2024
DA  - 2024/05/07
TI  - Comparison of American, European, and Exotic Options and Pricing Methods
BT  - Proceedings of the 9th International Conference on Financial Innovation and Economic Development (ICFIED 2024)
PB  - Atlantis Press
SP  - 318
EP  - 328
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-408-2_36
DO  - 10.2991/978-94-6463-408-2_36
ID  - Wang2024
ER  -