Please edit the question to limit it to a specific problem with enough detail to identify an adequate answer. Avoid asking multiple distinct questions at once.

See the How to Ask page for help clarifying this question. If this question can be reworded to fit the rules in the help centerplease edit the question.

I don't understand how you derived the boundary conditions in your code. You're supposed to get the option price binary payoff based on the strike, but I just don't see the variable K is even used in the boundary conditions.

I also don't quite follow how you compute theta. Your implementation looks different to the formulas I see in http: By subscribing, you agree to the privacy policy and terms of service. Sign up or log in to customize your list.

Stack Exchange Inbox Reputation and Badges. Questions Tags Users Badges Unanswered.

Quantitative Finance Stack Exchange is a question and answer site for finance professionals and academics. Join them; it only takes a minute: Here's how best way to make gil in ffxiv arr works: Anybody can ask a question Anybody can answer The best answers are voted up and rise to the top.

Is the code of my binary call option pricer using explicit finite difference, backward scheme correct?

Finite Difference Method Binary Options That Suck, Learn How To!

I am using explicit finite difference backward scheme to price a binary call option. Here is 95 finite difference method binary options MATLAB code: SmallChess 1, 1 9 We're not going to review your code for you here I can review the code if you bother to tell me why you think it's wrong. To check your results, just compare your price with a closed formula. StudentT, I am newbie when it comes to matlab, I want to be sure if I have done the right thing.

Numerical Methods For Digital Call Option Valuation - rbhaydon | Seeking Alpha

I would appreciate if you can help me out, I want to be sure if my boundary conditions are right. I am just learner.

SRKX, thanks for editing. No we won't, unless you provide example of inputs and outputs and tell us what seems wrong.

Otherwise the question is just too broad, and if you don't know how to proceed, then ask another question on how to verify an option pricer's code In it, you'll get: The week's top questions and answers Important community announcements Questions that need answers. Quantitative Finance Stack Exchange works best with JavaScript enabled.

MathOverflow Mathematics Cross Validated stats Theoretical Computer Science Physics Chemistry Biology Computer Science Philosophy more 3. Meta Stack Exchange Stack Apps Area 51 Stack Overflow Talent.