We investigate the pricing of financial options under the 2-hypergeometricstochastic volatility model. This is an analytically tractable model thatreproduces the volatility smile and skew effects observed in empirical marketdata. Using a regular perturbation method from asymptotic analysis of partialdifferential equations, we derive an explicit and easily computable approximateformula for the pricing of barrier options under the 2-hypergeometricstochastic volatility model. The asymptotic convergence of the method is provedunder appropriate regularity conditions, and a multi-stage method for improvingthe quality of the approximation is discussed. Numerical examples are alsoprovided.
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