New article by the theory team, now with more finance!

This is Quantic’s latest article “Quantum unary approach to option pricing“, by Sergi Ramos-Calderer, Adrián Pérez-Salinas, Diego García-Martín, Carlos Bravo-Prieto, Jorge Cortada, Jordi Planagumà, and José I. Latorre, available on the ArXiv.

This manuscript introduces a novel algorithm for European option pricing that uses the unary representation of the asset price. That is, each qubit maps into a single price of the underlying asset.

The amplitude distributor that uploads the expected price evolution to the qubit register and the circuit that encodes the estimated payoff into an ancilla are remarkably simple in the unary representation.

Schematic of qubit connectivity map to run the algorithm.

The amplitude distributor only requires first-neighbor interactions between qubits, therefore a simplified chip architecture is enough to run the algorithm.

Results of the algorithm running either unary and binary representations. Unary representation is clearly superior in this particular instance.

This scheme allows for a post-processing procedure that results in error mitigation for Noisy Intermediate-Scale Quantum devices. This algorithm is more robust to noise than their usual binary
counterparts.

Option pricing in this unary representation can therefore be beneficial for near-term quantum computers.