Learning Black Scholes option pricing the fun way via mobile apps
Hock Lye Koh, Su Yean Teh · 2013
In the recent past, technology has advanced significantly to promote e-learning as an effective learning tool. Where physical facilities are lacking due to resource constraints, e-learning may be utilized as a complement to physical labs. Further, smartphone-based Android technology has accelerated the extension of laptop-based e-learning for implementation on smartphones and tablets. This paper presents the development and implementation of the Black Scholes Pricing Models on Android smartphone and tablet. The paper begins with a brief description of the classic Black Scholes mathematical models for pricing derivatives such as call and put options. Three different methods of approximations are adopted to solve the Black Scholes models, namely the analytical, the numerical and the Binomial Tree methods. For each method, the algorithms are implemented on Android operating system. A sample demonstration of these Android smartphone app simulations is given to illustrate the implementation methodology and run-time steps. The simulated results among the three different methods are compared. Simulation results indicate correct implementation of the three methods for the Black Scholes model on smartphones. Further development is on-going to fully utilize Android smartphone app for pricing financial derivatives.