P.P.D.N.KaushalyaN.G.A.Karunathilake2014-12-242014-12-242014Annual Research Symposium,Faculty of Graduate Studies, University of Kelaniya, Sri Lanka; 2014 :121phttp://repository.kln.ac.lk/handle/123456789/4930Financial mathematics provides tools for the constructions in financial modeling. Various Financial Mathematical models have been developed for the description of financial derivatives for past few decades. An option is a contract that gives the purchaser the right to buy or sell a specified financial product of an underlying asset at a fixed price on a specified future date. There is no obligation to exercise the option. Two main types of options, namely, American and European options are widely used in today�s world. European option may be exercised only at the expiration date of the option while the American option may be exercised at any time before the expiration date.ArticleMathematics