Not modeling the cap seems like a fatal flaw here that should be up front and center. That means that arbitrarily large payoffs are truncated to $0 as far as the market is concerned. At best, the pricing can only reflect a mixture of opinion about the probability of successes and payoffs below the cap and gives you some idea of something like a percentile estimate of OA success...
Not modeling the cap seems like a fatal flaw here that should be up front and center. That means that arbitrarily large payoffs are truncated to $0 as far as the market is concerned. At best, the pricing can only reflect a mixture of opinion about the probability of successes and payoffs below the cap and gives you some idea of something like a percentile estimate of OA success...