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Easy · options_pricing · Quant Researcher interview question · bachelier_model, normal_model, option_pricing, arithmetic_brownian_motion, options_pricing
The Bachelier model prices options by assuming the underlying asset follows an arithmetic Brownian motion, resulting in a normal distribution of prices. This contrasts with the lognormal assumption of the Black-Scholes model and is crucial for pricing options on assets that can have negative values, such as interest rate spreads or certain commodities. The model provides a closed-form solution for European options. Task Implement the function bachelier_option_price(S, K, T, r, sigma, option_typ