Transforming Black Scholes Into the Heat Equation

[@mehdilaanaite1707]

Great video!!
Just a little mistake you forgot the a^2 in front of u when you have substituted v by u

[@mikethemathematician]

Thanks for pointing that out!

[@alexeyrogozinskiy2622]

and further = in U_tau... but am sure, who follows will notice))

[@mikethemathematician]

@@alexeyrogozinskiy2622 thanks for catching the typo!

[@张佳仪-d8s]

thanks! like it

[@armanavagyan1876]

Awesome PROF 👍

[@mikethemathematician]

Thanks @armanavagyan1876

[@Engel-ol5rm]

Great video!

[@mikethemathematician]

Thanks!

[@boriscrisp518]

Needs intuition rather than the wall of derivation, feels like education went 50 years back in time

[@mikethemathematician]

@boriscrisp518 The intuition is that parabolic PDEs with smooth coefficients exhibit many of the same properties as the heat equation. Since the differential operator x(d/dx) = d/dy, where y= ln(x), we can change the stock price variable logarithmically to convert to a constant coefficient equation. Does that make more sense?