Emotion-Integrated Option Pricing Models: From Black-Scholes to Cheetah-8

Title: Emotion-Integrated Option Pricing Models: From Black-Scholes to Cheetah-8Author: DongHun Lee This paper proposes a next-generation financial pricing framework, Cheetah-8, which integrates emotional state variables into classical stochastic models. Starting from the limitations of the Black-Scholes model, the paper explores alternative approaches such as the Heston model, Merton Jump-Diffusion, SVJ models, and machine learning-based pricing methods. The Cheetah-8 framework introduces a real-time emotional index EtE_tEt derived from news, disclosures, social media, and app interactions. This index is mathematically embedded into the asset’s stochastic differential equation (SDE), enabling pricing models to reflect sentiment-volatility co-movements. Comparative simulations demonstrate that under sentiment shocks, Cheetah-8 yields more responsive and realistic option prices than traditional models. The paper concludes by presenting Cheetah-8 as a foundational structure for ethical and emotion-aware financial systems. This work is licensed under CC BY-NC 4.0 — non-commercial use is permitted with attribution; commercial use requires direct agreement with the author.