What Alternative Options Pricing Models Are Sometimes Preferred for Highly Volatile Assets like Crypto?

Alternative models are preferred because Black-Scholes assumes a normal distribution of returns, which crypto violates with its 'fat tails' (extreme price movements). Models like the Merton Jump-Diffusion model account for sudden, unexpected price jumps.

Another is the Heston model, which allows for stochastic volatility (volatility that changes over time), offering a more realistic representation of the crypto market's price dynamics.