Pricing of American Put

A fluid mechanics guy used a so-called "homotopy analysis" method to challenge the open problem - American put pricing - in a different way.

This is a refreshing methodology though the proof in the Quantitative Finance paper is not so rigorous. That reminds me of Fourier's story.

However, this result may not be so ground breaking as BSM. First, it lacks explicit economic meaning which is a must-have to excite financial economists. Second, instead of putting much effort in this direction, we should put more focus on making the theoretical model more realistic. That, needs more explorers, not only diggers.

Anyway, all ways lead to Rome. For this idea, it's good to think the problem different. It should be appreciated.

Ref:
[1] Zhu, S.-P., An Exact and Explicit Solution for the Valuation of American Put Options, Quantitative Finance, 2006, Vol. 6, No. 3, 229-242.