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Medium · derivatives · Quant Researcher interview question · options, greeks, numerical-methods, finite-difference, black-scholes
The Finite Difference Method (FDM) is a numerical technique used in quantitative finance to approximate derivatives (Greeks) when analytical formulas are computationally expensive or unavailable. By perturbing the underlying asset price and observing the resulting change in option value, this method estimates sensitivities such as Delta, which measures the rate of change of the option price with respect to the underlying asset. This approach is essential for pricing complex derivatives and manag