symbolic level are applied to predict the daily change in volatility of two major stock indices.... …

option prices. But some of its assumptions, like constant volatility or log-normal distribution of asset prices,do not find … implied volatility surface. To overcome this problem Carr and Madan (1999) developed a fast method to compute option prices …

, especially on the BS implied volatility. Implied binomialtrees (IBT) models capture the variations of the implied volatility … known as \volatility smile". They provide a discrete approximation to the continuous risk neutral process for the underlying … Barle and Cakici (BC). After the formation of IBT we can estimate the implied local volatility and thestate price density …

approach to model spot prices that combines mean-reversion,spikes and stochastic volatility. Thereby we use different mean …

lognormal distributions with constant volatility parameter. In practice volatility changes and the distribution deviates from … allows calculation of future volatility and can be applied to hedging exotic options. …