Heston Model

The Heston Model is a mathematical framework used to describe how the price of financial assets, like stocks, changes over time, particularly focusing on the volatility of those prices. Unlike simpler models that assume volatility is constant, the Heston Model recognizes that volatility can change and even fluctuate over time. This allows it to better capture real market behavior, making it more useful for pricing options and managing risk. Essentially, it provides a more realistic way of modeling the uncertainty and unpredictability inherent in financial markets.