by Chen Liu, Haochen Luo, Junjie Xu, Tang Pok Hin, Yifan Li, Yuan Zhang, Zhengzhao Lai
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Suggested foundations for text and language models in finance and options and derivatives pricing. Specialist prerequisites vary by paper.
Understand how text is converted into numerical inputs.
Check whether labels measure the financial construct of interest.
Build replication and risk-neutral probabilities in a tractable model.
Distinguish pricing probabilities from physical forecasts.
Test whether a text-derived signal survives an honest financial evaluation.
Measure agreement when constructing or checking labels.
Connect the pricing equation, closed-form value and implied volatility.
Start in discrete time, move to Brownian motion, then read the original pricing argument and simulate it.