The Lasting Impact of the 1987 Stock Market Crash

The video tutorial discusses the impact of the 1987 market crash on options markets, highlighting the increased demand for downside protection and the emergence of the volatility smile. It explains the principles of financial modeling, focusing on the Black Scholes model and its limitations post-1987. The tutorial also covers the concept of financial models, using analogies to simplify complex ideas, and addresses current challenges in financial modeling, such as negative interest rates.

In what ways did existing models for pricing options fail after the 1987 crash?

What are some current challenges in financial modeling related to interest rates?