The following points support our choice of methods. First, the specification of the stochastic process is complex due to the variety of possible parameterisations 9 and requires a considerable number of parameters, which increases the potential impact of estimation errors. Second, the estimation by means of finite differences requires equally spaced strike prices. For our sample, this is a considerable difficulty in the implementation, as section demonstrates. Third, regarding the performance of the tree approach, there is little evidence of superior results 10 . Finally, the two approaches that we use are frequently applied in the literature. Despite the different modelling strategies, both approaches are flexible enough to generate.
