A guided tour through quadratic hedging approaches (Q2771116)

This is a broad exposition describing recent results and perspective of the development in the area of pricing and hedging options by using quadractic criteria. Two approaches are explained in detail, namely, a preference-free approach under incompleteness, and that one using surjective criteria according to which a dynamic trading strategy is chosen and option prices are computed. Special attention is paid to the case when the price process \(X\) is a local P-martingale. The possibility of a local risk-minimization in the general case are discussed, too. The latter method is compared with mean-variance hedging.NEWLINENEWLINEFor the entire collection see [Zbl 0967.91001].