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What Is a Volatility Smile? The term “volatility smile” is used to describe the unique graphical representation of implied volatilities for various options on the same underlying asset and with identical expiration dates. This shape is known as a “smile,” as it typically resembles an upward curve, or a smile,
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Introduction to the Heston Model The Heston Model, introduced by Steven Heston in 1993, represents a significant advancement in the realm of option pricing models. As an extension of the Black-Scholes model, this stochastic volatility model is essential for professional investors seeking to understand and price European options in dynamic
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