Application of Option Pricing Framework for Analyzing and Predicting Stock Prices in Energy Markets

• DOI: 10.32628/ijsrset2073138
• Publication Date: 2020-12-29T14:37:39Z
• Authors: Victor Alexander ...; Jane Akinyi Aduda; Joseph Mung'atu
• Keywords: 0502 economics and business; 05 social sciences

In this study, the evaluation of the pricing framework for predicting West Texas Intermediate crude oil stock was implemented where detailed analysis with varying changepoint shows that an arbitrage-free forward price can be derived from the buy-and hold strategy in the energy market thereby enabling investors in the market willing to be salvage from the market uncertainties as well as Arrow-Debreu situations to execute a spot or forward contracts depending on the time and place the market becomes favorable.