Option Valuation: Future Asset Price Paths
Interactive

Option Valuation: Future Asset Price Paths

Intuition Publishing
Updated Sep 24, 2020

In estimating possible future price paths of an asset, the drift and random components must be calculated, and this process is known as a generalized Weiner process. We look at elements of a Weiner process in the valuation of options, and build on this by introducing the concepts of confidence intervals, volatility cones, and asymmetric probability distributions.