
What is risk neutral measure?
It took me a while to master the risk neutral probability and it is worth sharing my experience. The risk neutral probability is the probability where the asset is a martingale; the future value of the asset is equal to its today's value. In a risk neutral world the future value of an asset is its today's value. This is a consequence of the non arbitrage principle; if the future value of the asset would have been different, the market would have sold or purchased until the as