Option pricing models and related empirics
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Since the 1987 stock market crash, the Black-Scholes option pricing model gives rise to more significant biases. Several alternative models aim to overcome this weakness. They are presented in the first part of this thesis. However, none of these models are fully capable of explaining observed option market prices. Other explanations have been advanced and give some additional insight to the world of options. The second part of the thesis provides an overview of related empirical developments to date. A thorough understanding of option pricing models and related empirics proves to be important for different aspects of finance.