Abstract:
Fair pricing of financial instruments is at the heart of market stability. Mispricing
securities can lead traders into suffering massive losses which can indirectly
affect the financial health of markets. It is thus, vital to be able to derive the
fair price of traded financial instruments as this indirectly leads to optimized
financial portfolios. This thesis aims to present a new approach to quantify the
fair price of an Option contract given the underlying asset data. The models
presented here would be constraint free when contrasted with traditional Option
pricing models. We attempt to achieve the stated goal by leveraging advances in
computational techniques.
