Monte Carlo Simulation: Pricing by Random Sampling
Chapter 80 is where Wilmott shows you a completely different way to price options. Forget partial differential equations. Forget finite differences. Instead, just simulate random stock price paths, calculate what the option would pay on each path, average the results, and discount back to today. That is Monte Carlo simulation in a nutshell. It sounds almost too simple to work, but it is one of the most powerful tools in all of quantitative finance.