Using the Heston model in pricing European Options Research of PhD dissertation

Options price are generally determined by a tradeoff between risk and return. Options- prices models generally rely on the volatility index in stock market prices, which represents the risk to the buyer or the option seller in the financial market. This has led to the emergence of many models of pricing options that generated different values for one option according to the assumptions, parameters and techniques used in each model , and hers lies the problem of this research, that the application of pricing models that assume volatility instability can produce option s Prices closer to market prices. The aim of this research is to apply one of the models of random volatility in the samples-prile of options, namely Hesston Model. To achieve the objective of the research, the historical published prices of the shares of (4) large companies operating in the US technology sector for the period from (29/12/2015) to (19/2/2016) for a sample consisting of (12) options on the shares of those companies. The research had a set of conclusions and recommendations, the most important of which is that the prices of Hesston model almost close to its market price, but this model depends on the accuracy of its prices on the change in the value of the parameters it consists of as well as the complexity that accompanies its application.