Series Vol. 17 , 13 September 2023
* Author to whom correspondence should be addressed.
Option, as an important financial derivative, has received more and more attention from investors in recent years. This paper includes three parts, the first part introduces the concept of options, including the birth and history of options, the trading of options, and different types of options. Then it discusses the history of option pricing and two typical and classic option pricing models and then introduces implied volatility. The second part of this paper introduces the specific development of the option pricing models, the correction process of option pricing models, and volatility models. Different types of volatility, and their comparisons are included. And this paper also discusses the two functions of implied volatility, one is predicting the future and the other is for risk management and portfolio management. The third part concludes the first two-part and discusses the recent progress of option pricing and its volatility.
option pricing, Black-Scholes model, implied volatility
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The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.