| I don't really understand your viewpoint - I assume you don't actually work in trading? Aside from the "theoretical" developments the other comment mentioned, your implication that there is some fixed truth is not reflected in my career. Anybody who has even a passing familiarity with doing quant research would understand that black scholes and it's descendants are very basic results about basic assumptions. It says if the price is certain types of random walk and also crucially a martingale and Markov - then there is a closed form answer. First and foremost black scholes is inconsistent with the market it tries to describe (vol smiles anyone??), so anybody claiming it's how you should price options has never been anywhere near trading options in a way that doesn't shit money away. In reality the assumptions don't hold - log returns aren't gaussian, the process is almost certainly neither Markov or martingale. The guys doing the very best option pricing are building empirical (so not theoretical) models that adjust for all sorts stuff like temporary correlations that appear between assets, dynamics of how different instruments move together, autocorrelation in market behaviour spikes and patterns of irregular events and hundreds of other things . I don't know of any firm anywhere that is trading profitably at scale and is using 20 year old or even purely theoretical models. The entire industry moved away from the theory driven approach about 20 years ago for the simple reason that is inferior in every way to the data driven approach that now dominates |