Investors Beware: Choosing Wrong Volatility Model Leads to Huge Losses!
The article compares two types of models for predicting how stock prices change over time. The researchers found that the type of model used can greatly affect how accurately stock prices and options are predicted. They discovered that using a more complex model with jumps in stock prices and volatility can lead to better predictions and help investors avoid making costly mistakes. By including these jumps in the model, investors can minimize their losses and make more informed decisions about their investments.