A Numerical Analysis of Comparing Several Practical Approaches for Pricing both American and European Put Options

The present paper focuses on pricing with European or American put option that has yet to be studied. In solving option pricing problems, numerical methods form an essential part. Five numerical methods: Black-Scholes-Merton, Monte Carlo, Binomial, Trinomial, and Finite Difference have been implemented in the present work. Here Computer Algebra System (CAS) Python is used for the simulation. A comparison of these methods for both European and American put options has been shown by a graphical representation. Results show that Crank Nicolson Finite Difference Methods (FDM) gives us more accurate results than the other methods.