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When pricing European options (call or put) using the famous Black-Scholes model, one assumption is that the volatility is constant. My question is, if we
When pricing European options (call or put) using the famous Black-Scholes model, one assumption is that the volatility is constant.
My question is, if we are assuming that the volatility is stochastic, is there supposed to be any difference in the pricing of the option compared to when we assuming that the volatility is constant? and if there is what is the intuition behind this?
Thank you for any answer.
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