Analytical Solution of Black-Scholes Model for Pricing Barrier Option using Method of Partial Taylor Series Expansion

In this work, Black-Scholes differential equation for barrier/traditional option is solved using partial Taylor series expansion method. The developed solutions are in very good agreement with the closed-form solutions of the Black Scholes equation for the powered ML-payoff functions. Also, the analytical solutions of the new method in this present study give the same expressions as the solutions of projected differential equations and homotopy perturbation method as presented in the literature. Moreover, the reliability, speed, accuracy, and ease of application of the proposed method show its potential for wide areas of applications in science, financial mathematics, and engineering.