Why do we need the condition S d < E to be able to value a down-and-out

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Why do we need the condition S_d < E to be able to value a down-and-out call by adding together known solutions of the Black–Scholes equation (as in question 1)? How would we value the option in the case that S_d > E?

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Introduces Quantitative Finance

ISBN: 978-0470319581

2nd edition

Authors: Paul Wilmott

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Question Posted: Sep 23, 2020 05:57 AM

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Why do we need the condition S d < E to be able to value a down-and-out

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Introduces Quantitative Finance

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