Introducing Quantum-Powered Pricing: Estimating European Put Options with Qiskit Finance

​Experience the cutting-edge fusion of quantum computing and finance with our innovative script that leverages Qiskit Finance to estimate the price of European put options using a quantum algorithm. This groundbreaking approach holds the potential to revolutionize the way financial options are evaluated.Our script takes you on a quantum journey, starting with the setup of essential parameters that define the financial model. These parameters include the initial spot price, volatility, interest rate, and time to maturity, providing a solid foundation for accurate pricing. To capture the inherent uncertainty in the financial model, we construct a log-normal distribution that encapsulates the dynamic nature of market fluctuations.To evaluate the European put option, we introduce a powerful piecewise linear objective function. This function encapsulates the potential payoff of the option across different price levels of the underlying asset, enabling comprehensive analysis. By combining the uncertainty model and the objective function, we create an operator that sets the stage for quantum amplitude estimation (QAE) algorithm, our quantum-powered tool for precise option pricing.Precision and reliability are at the core of our solution. We allow you to set the desired target precision and confidence level for the QAE algorithm, ensuring the accuracy of the estimated option price. Harnessing the immense computational power of quantum computing, our algorithm performs advanced estimations that go beyond traditional methods.The moment arrives when our script executes the QAE algorithm, providing an estimated value for the expected payoff of the European put option. This revolutionary quantum-assisted estimation leverages the constructed operator, incorporating quantum computing techniques to unlock unparalleled accuracy and efficiency.Visualizing our results, we present you with a compelling plot showcasing the estimated value of the European put option along with the confidence interval. This graphical representation not only highlights the estimated price but also illustrates the range of uncertainty surrounding the estimation, empowering you with comprehensive insights into potential outcomes.To embark on this quantum journey, you'll need an IBM Q account and the Qiskit and Qiskit Finance Python packages. Our script guides you through the process of saving your IBM Q account details and loading the account, enabling access to the quantum backend required for executing the quantum algorithm. Once set up, you're ready to unlock the transformative power of quantum-powered pricing.Discover the future of financial evaluation today with our groundbreaking script, developed by the visionary Abraham Reines. Embrace the fusion of quantum computing and finance, and witness the possibilities unfold as you navigate the intriguing realm of option pricing.