Pricing For Barrier Option And Applied In Agriculture

In this paper we consider three problems on barrier options: A pricing formula of double barrier knock-out options with continuous bonus; Price single barrier options and lookback options with continuous bonus; Theory of barrier options is applied in agriculture economic.Firstly, We consider the problem that the underlying assets pay continuous bonus . Moreover, mathematical modle for it is made .The pricing formula of double barrier knock-out options is derived .It is an explicit expression of option pricing formula when bonus is zero.Secondly, Price single barrier options and lookback options with continuous bonus by limited the double barrier hitting probability density function. We give a new approach for pricing these exotic options.Finally, we direct order form agriculture by theory of barrier options to transfer the market risk of produce.We show the pricing modle for American up-and-out put and up-and-out call on stochastic process with the condition that the produce's price satisfy geometric Brownian motion.We analyze the optimal exercise boundary for buyer and seller. Our results are practically meaningful for increasing the profit of farmers and enterprises.