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In this article, a compact finite difference method is proposed for pricing European and American options under jump-diffusion models. Partial integro-differential equation and linear complementary problem governing European and American…

Computational Finance · Quantitative Finance 2018-04-25 Kuldip Singh Patel , Mani Mehra

The goal of the present work is to solve a linear dispersive equation with variable coefficient advection on an unbounded domain. In this setting, transparent boundary conditions are vital to allow waves to leave (or even re-enter) the,…

Numerical Analysis · Mathematics 2021-06-09 Lukas Einkemmer , Alexander Ostermann , Mirko Residori

We consider stochastic differential equations driven by a general L\'evy processes (SDEs) with infinite activity and the related, via the Feynman-Kac formula, Dirichlet problem for parabolic integro-differential equation (PIDE). We…

Numerical Analysis · Mathematics 2021-05-24 G. Deligiannidis , S. Maurer , M. V. Tretyakov

Given an unconditional diffusion model targeting a joint model $\pi(x, y)$, using it to perform conditional simulation $\pi(x \mid y)$ is still largely an open question and is typically achieved by learning conditional drifts to the…

Machine Learning · Statistics 2025-02-21 Adrien Corenflos , Zheng Zhao , Simo Särkkä , Jens Sjölund , Thomas B. Schön

We present a stochastic method for efficiently computing the solution of time-fractional partial differential equations (fPDEs) that model anomalous diffusion problems of the subdiffusive type. After discretizing the fPDE in space, the…

Numerical Analysis · Mathematics 2024-02-27 Nicolas L. Guidotti , Juan Acebrón , José Monteiro

We construct a sequence of functions that uniformly converge (on compact sets) to the price of Asian option, which is written on a stock whose dynamics follows a jump diffusion, exponentially fast. Each of the element in this sequence…

Computational Engineering, Finance, and Science · Computer Science 2008-10-29 Erhan Bayraktar , Hao Xing

We propose a novel problem formulation of continuous-time information propagation on heterogenous networks based on jump stochastic differential equations (SDE). The structure of the network and activation rates between nodes are naturally…

Numerical Analysis · Mathematics 2018-10-26 Yaohua Zang , Gang Bao , Xiaojing Ye , Hongyuan Zha , Haomin Zhou

Integro-partial differential equations occur in many contexts in mathematical physics. Typical examples include time-dependent diffusion equations containing a parameter (e.g., the temperature) that depends on integrals of the unknown…

Analysis of PDEs · Mathematics 2007-05-23 Peter A. Becker

We construct a finite element like scheme for fully non-linear integro-partial differential equations arising in optimal control of jump-processes. Special cases of these equations include optimal portfolio and option pricing equations in…

Numerical Analysis · Mathematics 2008-05-22 Fabio Camilli , Espen R. Jakobsen

In this paper, a high-order exponential scheme is developed to solve the 1D unsteady convection-diffusion equation with Neumann boundary conditions. The present method applies fourth-order compact exponential difference scheme in spatial…

Fluid Dynamics · Physics 2018-05-16 Yucheng Fu , Zhenfu Tian , Yang Liu

This work presents a probabilistic scheme for solving semilinear nonlocal diffusion equations with volume constraints and integrable kernels. The nonlocal model of interest is defined by a time-dependent semilinear partial…

Numerical Analysis · Mathematics 2022-05-03 Minglei Yang , Guannan Zhang , Diego Del-Castillo-Negrete , Yanzhao Cao

In this article, a three-time levels compact scheme is proposed to solve the partial integro-differential equation governing the option prices under jump-diffusion models. In the proposed compact scheme, the second derivative approximation…

Computational Finance · Quantitative Finance 2018-04-23 Kuldip Singh Patel , Mani Mehra

We propose a fourth--order compact finite--difference (HOC--FD) scheme for the transformed Bates partial integro--differential equation (PIDE). The method employs an implicit--explicit (IMEX) Crank--Nicolson framework for local terms and…

Pricing of Securities · Quantitative Finance 2026-02-24 Neda Bagheri Renani , Daniel Sevcovic

The optimization of the latents and parameters of diffusion models with respect to some differentiable metric defined on the output of the model is a challenging and complex problem. The sampling for diffusion models is done by solving…

Computer Vision and Pattern Recognition · Computer Science 2025-02-13 Zander W. Blasingame , Chen Liu

In this paper we consider the numerical solutions for a class of jump diffusions with Markovian switching. After briefly reviewing necessary notions, a new jump-adapted efficient algorithm based on the Euler scheme is constructed for…

Numerical Analysis · Mathematics 2015-03-19 Jun Ye , Kai Li

In this paper, we develop a fully discrete Galerkin method for solving initial value fractional integro-differential equations(FIDEs). We consider Generalized Jacobi polynomials(GJPs) with indexes corresponding to the number of homogeneous…

Numerical Analysis · Mathematics 2015-01-13 P. Mokhtary

Time fractional advection-dispersion equations arise as generalizations of classical integer order advection-dispersion equations and are increasingly used to model fluid flow problems through porous media. In this paper we develop an…

Numerical Analysis · Mathematics 2019-05-16 Carlos E. Mejía , Alejandro Piedrahita

Diffusion models have emerged as powerful generative tools with applications in computer vision and scientific machine learning (SciML), where they have been used to solve large-scale probabilistic inverse problems. Traditionally, these…

In this paper, we concentrate on solving second-order singularly perturbed Fredholm integro-differential equations (SPFIDEs). It is well known that solving these equations analytically is a challenging endeavor because of the presence of…

Numerical Analysis · Mathematics 2024-01-30 Mehebub Alam , Rajni Kant Pandey

We develop a recursive approach for deriving closed-form solutions to both conditional and unconditional moments of affine jump diffusions with state-independent jump intensities. Using these moment solutions, we construct closed-form…

Mathematical Finance · Quantitative Finance 2025-04-10 Yan-Feng Wu , Jian-Qiang Hu