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Neural networks for option pricing and hedging: a literature review

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arxiv 1911.05620 v2 pith:LFVUUWVE submitted 2019-11-13 q-fin.CP cs.LGq-fin.RMq-fin.STstat.ML

classification q-fin.CPcs.LGq-fin.RMq-fin.STstat.ML
keywords beenhedgingnetworksneuraloptionpricingreviewassets
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Neural networks have been used as a nonparametric method for option pricing and hedging since the early 1990s. Far over a hundred papers have been published on this topic. This note intends to provide a comprehensive review. Papers are compared in terms of input features, output variables, benchmark models, performance measures, data partition methods, and underlying assets. Furthermore, related work and regularisation techniques are discussed.

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Cited by 3 Pith papers

Reviewed papers in the Pith corpus that reference this work. Sorted by Pith novelty score. Full citation record

  1. On MUON optimization: From non-convergence to an error analysis with Polar Express and the Newton-Schulz polynomial from implementations

    math.OC 2026-08 accept novelty 8.0 of 10

    For a one-dimensional quadratic stochastic optimization problem, MUON with Newton-Schulz steps provably fails to converge to the minimizer for all sufficiently large mini-batch sizes when the data is skewed, while a n...

  2. Statistical Arbitrage in Options Markets by Graph Learning and Synthetic Long Positions

    q-fin.PR 2025-08 conditional novelty 6.0 of 10

    A tree-based graph neural network predicts put-call parity deviations in KOSPI 200 options, and a constrained synthetic long-short arbitrage projection turns those predictions into positive-P&L positions with zero ter...

  3. Option Pricing Using Ensemble Learning

    cs.LG 2025-06 reject novelty 2.0 of 10

    On CSI 300 index options, gradient boosting ensembles (LGBM, XGBoost, NGBoost) achieve the lowest RMSE in most experiments, but the training set includes data from after the test period, invalidating the temporal real...

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