http://people.math.jussieu.fr/~tankov/body.html appears to be the guru of this 
subject

isn't the answer just the normal Ito formula, plus a term for the jumps?  Am I 
missing something here (almost certainly)

best
dd


> ----- Original Message -----
> From: "Sabri Oncu" <[EMAIL PROTECTED]>
> To: "pen-l" <[email protected]>
> Subject: [Pen-l] Re: A question to the econometricians and other technical    
> guys
> Date: Sat, 4 Oct 2008 23:52:56 -0400
> 
> 
> Les:
> 
> > seems like the reference you want is:
> >
> > Merton, R. 1976 Option Pricing when Underlying Stock Returns are
> > Discontinuous,  Journal of Financial Economics, 125-144, May 1976
> 
> Oh, no! He seems to be one of the confused guys I was referring to and
> there are a few other big names I had in mind. I am confused, too, so
> I do not hold this against them.
> 
> But thanks, I will check the other references you sent.
> 
> Any other leads?
> 
> Best
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