This section is a knowledge point that even kids studying financial engineering and options futures can't escape, but my teacher said that maturity valuation is all over, and I went to Google to understand much of the content myself [sneaky R]
This section includes:
⚠️ Monte Carlo simulated valuation of European options
⚠️ American option least square Monte Carlo valuation
The least squares mount comes from Longstaff & Schwarz's paper. The difficulty of pricing American options is the exercise of power at every point in time, requiring a comparison between the current strike value (E_t) and probable value (H_t).
To estimate CV, the LS duo proposed least squares regression. First, simulate the price path of several underlying assets according to normal Monte Carlo, calculate the payoff at the end of the period, then backtrack from the beginning of the period to calculate the estimated value of the previous time node, compare the strike value of that node, take the larger value as the node option price, and continuously backtrack the comparison until the initial node.
The LSM algorithm is still difficult to understand. Adults and children who don't understand can send me a private message in the background. I'll share with you a few articles that will help you understand this point ~ [Party R] [Party R]

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