Heston Model Validation

This project delves into the complexities of the Heston model, exploring its dynamic volatility assumption as a stochastic process that reflects real-world scenarios with changing volatility. In contrast to the Black-Scholes-Merton model, which relies on constant volatility, we validated this approach through in-depth technical analyses. The results highlight the Heston model's accuracy in pricing European call options, especially for longer-term options with more stable volatility. Despite its computational complexity, the project underscores the Heston model's suitability in these findings, pointing out its unique features in comparison to the Black-Scholes model.