Bachelier model

The Bachelier model is a mathematical way to predict how the price of a financial asset, like a stock or a bond, might change over time. It assumes that price movements are random, similar to how particles move in a liquid, and can sometimes go below zero, which isn't realistic for actual prices. Despite this limitation, it was one of the first models to describe financial randomness and laid the groundwork for modern options pricing. Essentially, it treats prices as a kind of random walk, helping traders and analysts understand and manage financial risks.