Levy processes.

[BILEL]

Hello everyone!

what are Levy processes? what are jump models?
How can find that the Levy processes are better than the Black-Scholes model in financial modeling?

Thank you.

 

[weiwern]

Because of the jump component, it better approximates sudden market changes that result in large changes in asset values as compared to B-S assumptions where successive changes on asset prices are small.