Applied Mathematical Sciences, vol. 8, 2014, no. 143, 7125 - 7135
HIKARI Ltd, www.m-hikari.com
http://dx.doi.org/10.12988/ams.2014.46424
A Genetic Algorithm to Price an European Put Option
Using the Geometric Mean Reverting Model
Joseph Ackora-Prah
Department of Mathematics
Kwame Nkrumah University of Science and Technology, Kumasi, Ghana
Perpetual Saah Andam
Department of Mathematics
Kwame Nkrumah University of Science and Technology, Kumasi, Ghana
Samuel Asante Gyamerah
Department of Mathematics
Kwame Nkrumah University of Science and Technology, Kumasi, Ghana
Daniel Gyamfi
Department of Mathematics
Kwame Nkrumah University of Science and Technology, Kumasi, Ghana
Copyright © 2014 Joseph Ackora-Prah et al. This is an open access article distributed
under the Creative Commons Attribution License, which permits unrestricted use, distribu-
tion, and reproduction in any medium, provided the original work is properly cited.
Abstract
Evolutionary computation have been used in different areas of re-
search in finance. The more the perfect price of option we obtain the
more attractive it becomes to the investors. Investors have developed
much interest in option investment but when the option is exercised at
a wrong time, it can lead to massive loss for the investor. This paper is
mainly focused on pricing a European put option when the underlying
security price is geometric mean reverting with the assumption that the
Girsanov change of measure has already been implemented and it has
a constant interest rate. We provide a Genetic Algorithm which gives a