A Study on the Development of Machine Learning Methods for Options Pricing Applications

Abstract

The traditional option pricing model is of great importance, but has many defects in practical applications. With the development of machine learning theory, the powerful learning ability is applied to the option pricing problem, which can effectively solve the defects of the traditional option pricing model. This paper introduces the basic concepts of option pricing and machine learning, and describes the specific model of option pricing fused with BP neural network model and support vector machine model, expresses views on the option pricing methods of traditional model and fused with machine learning model, and presents the outlook on future research. Option pricing is an important topic in finance, and traditional option pricing models have many limitations. With the development of computers and artificial intelligence, machine learning theory can be applied to option pricing models with good results.