Pricing Of European Quanto Options Based On Dividends

Financial instruments in financial markets can be divided into two cate-gories:One is the basic financial instruments:the other is derived from other assets, often called financial derivatives. Financial derivatives are important financial risk management tools, and the strategy of using financial derivatives to manage risk can be called hedging strategies. Among all derivatives, the option is regarded as the core tool of financial risk management.Therefore, a systematic research of the options not only has theoretical significance, but also has important practical significance.Since the beginning of the 20th century, the french scholar Bachelier (1900) first began the systematic study of the option pricing theory, the option pric-ing theory has become the research object of a number of economists and mathematicians. Among them, the milestone is that Black and Scholes (1973) presented the first option pricing model and established an option pricing for-mula. Soon after, Metron (1975) developed the Black-Scholes formula in many ways.Their revolutionary achievements had vitally important significance both in theory and practice and caused the second" the Wall Street revolution." The option pricing theory continues to develop. Recently, the experts found that backward stochastic differential equations (BSDEs) proposed by the famous mathematicians Peng and Pardoux (1990) can play an important role in op-tion pricing theory, and found that the option price of contingent claim can be recovered by solving a related BSDE.In this paper, we will use the BSDE to study the call option pricing prob-lem of european quanto options based on dividends which plays an important role in avoiding a class of international investment risk, and obtain the price of put european quanto options based on dividends by the call-put parity formula of european quanto options based on dividends. Finally, we will use the com-parison theorem of BSDE to analyze the dividends on foreign stock, domestic interest rates, foreign interest rates and other factors, and then present these factors' impact on european quanto options based on dividends.