The Self-financing Condition And Its Application

With the continuous development of financial mathematics, derivatives pricing has become the most important part of financial mathematics. In the last thirty years, there have been many pricing theories. In this paper, the author use some portfolio to copy the very dericative, with the underlying assets and the risk-free asset to copy target derivatives, then conclude the self-financing conditions. Using self-financing portfolio to determine the price of a target derivative product. In this paper, the author assumes that the price process of the underlying assets were made by Brown motion, Poisson process, and the jump process of these three kinds of assumptions.