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Persistent link: https://www.econbiz.de/10012127314
This paper presents various finite difference schemes applied to the SABR arbitrage free density problem. Hagan initially proposed a Crank-Nicolson discretization, which can lead to oscillations in the option price. Among a variety of finite difference schemes, it is found that the TR-BDF2 and...
Persistent link: https://www.econbiz.de/10013034096