Rohini Kumar

  1. Small-time asymptotics for fast mean-reverting stochastic volatility models.

    Authors: Jean-Pierre Fouque, Jin Feng, Rohini Kumar
    Subjects: Pricing of Securities
    Abstract

    In this paper, we study stochastic volatility models in regimes where the
    maturity is small but large compared to the mean-reversion time of the
    stochastic volatility factor. The problem falls in the class of
    averaging/homogenization problems for nonlinear HJB type equations where the
    "fast variable" lives in a non-compact space. We develop a general argument
    based on viscosity solutions which we apply to the two regimes studied in the
    paper.

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