New valuation formulas for knock-in American options revolutionize financial markets!
The article discusses knock-in American options, which are contracts where the option holder gets an American option only if the underlying asset price crosses a certain trigger level. The researchers developed formulas to calculate the value of these options using the Black-Scholes pricing model. The formulas vary depending on the relationship between the trigger price and the critical price of the option. They also tested the formulas with numerical examples to show they work effectively.