Book Image

Financial Modeling Using Quantum Computing

By : Anshul Saxena, Javier Mancilla, Iraitz Montalban, Christophe Pere
5 (1)
Book Image

Financial Modeling Using Quantum Computing

5 (1)
By: Anshul Saxena, Javier Mancilla, Iraitz Montalban, Christophe Pere

Overview of this book

Quantum computing has the potential to revolutionize the computing paradigm. By integrating quantum algorithms with artificial intelligence and machine learning, we can harness the power of qubits to deliver comprehensive and optimized solutions for intricate financial problems. This book offers step-by-step guidance on using various quantum algorithm frameworks within a Python environment, enabling you to tackle business challenges in finance. With the use of contrasting solutions from well-known Python libraries with quantum algorithms, you’ll discover the advantages of the quantum approach. Focusing on clarity, the authors expertly present complex quantum algorithms in a straightforward, yet comprehensive way. Throughout the book, you'll become adept at working with simple programs illustrating quantum computing principles. Gradually, you'll progress to more sophisticated programs and algorithms that harness the full power of quantum computing. By the end of this book, you’ll be able to design, implement and run your own quantum computing programs to turbocharge your financial modelling.
Table of Contents (16 chapters)
1
Part 1: Basic Applications of Quantum Computing in Finance
5
Part 2: Advanced Applications of Quantum Computing in Finance
10
Part 3: Upcoming Quantum Scenario

Derivative Valuation

Derivatives pricing is one of the most crucial aspects of quantitative finance. The gross market value of derivatives contracts stood at $12.4 trillion (OTC derivatives statistics at end-December 2021bis.org), making it one of the most lucrative and challenging problems to simulate and optimize. Although many aspects of derivative pricing can be computed using classical computing, gate-based quantum computers can be an efficient resource when multiple computations are required, due to their ability to parallelize and handle multiple assets. This chapter looks into the theoretical aspects of derivatives pricing and examines its real-time applications through classical computing and gate-based quantum computers.

This chapter addresses the need to explain option pricing from a layman’s point of view. Various aspects of option pricing will be described in an easy-to-understand manner. Different case studies and anecdotes will be incorporated to...