Jump diffusion

Jump diffusion is a variation of the random walk model used to model stock prices. It works the same way as a regular random walk, with stock prices either going up or down by a random amount each time. The difference with jump diffusion is that it also allows for the stock price to jump up or down by bigger amounts, which is often referred to as a "jump". This means that the stock price can quickly move from one level to another, and isn't as smooth as it is with a regular random walk. Jump diffusion can help to make more accurate predictions about how stock prices will move in the future.