Quantum Finance: Using Number Operators in Financial Transaction Models a Proposed Model Set-Up for CDS Markets

11 Pages Posted: 20 Feb 2020

Date Written: January 24, 2020

Abstract

The current short paper introduces and discusses a Quantum Filed Theoretic modeling of CDS market. The paper builds upon the novel number operator theoretic set up as fundamental to QFT, recently been extended to financial market modeling (Haven, Khrennikov and Robinson, 2017), and presents a model of credit default swaps transactions. First, the paper discusses the use of number operators in financial trading models in general. The paper also reviews briefly other usages of number operators, for example in dynamic modelling of agents’ decision making while interacting with the outside information atmosphere, which can be taken as a Bath. Secondly, the paper builds different scenarios where trading happens between subgroups of the entire market. The predictions of the model, namely, the conservation rules emerging out from the model, and the evolution of the market in terms of no of assets transacted can be empirically verified with simulation techniques, which is one important advantage for the quantum like modeling when applied to social sciences. Oscillatory nature of solutions of quantum modeling is another striking feature which distinguishes quantum like modeling from the related classical models.

Keywords: QFT(quantum field theory),QM(quantum mechanics), CDS(credit default swaps), number operators, creation-destruction operators, Heisenberg Equations of Motions, Hamiltonian, Conservation Rules, oscillators

JEL Classification: C00, C10, C18

Suggested Citation

Patra, Sudip, Quantum Finance: Using Number Operators in Financial Transaction Models a Proposed Model Set-Up for CDS Markets (January 24, 2020). Available at SSRN: https://ssrn.com/abstract=3524896 or http://dx.doi.org/10.2139/ssrn.3524896

Sudip Patra (Contact Author)

OP JGU ( email )

Sonepat Narela road
Sonepat
Sonepat, Haryana 131001
India

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