Abstract
Option is an effective financial derivative instrument. It is crucial to price options rationally in the options market. The classical B-S option pricing model yields an option price that deviates from the actual price of the market due to its unduly ideal assumptions. Later scholars proposed the GARCH and SV models to optimize the B-S model. With the SSE 50 ETF option selected as the study object, The GARCH model and the SV model are used to compare the pricing errors of the GARCH model and the SV model. The empirical results show that the SV model is better than the GARCH model in terms of accuracy in any degree of value and option duration, which is suitable for the Chinese options market.
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