Derivatives Pricing

Derivatives pricing involves determining the value of financial contracts whose value depends on an underlying asset, like stocks or commodities. In experimental finance, researchers simulate market conditions to understand how factors like market volatility, interest rates, and time to expiration affect prices. By modeling different scenarios, they aim to uncover pricing strategies and market behaviors that inform trading decisions. The goal is to accurately reflect potential outcomes, providing insights into risk management and investment practices in real-world financial markets.