Use of markov chain process in option pricing

Another advanced quant topic to a question about future pricing about Markov chains. Here is an intelligent answer:

Here was the answer:

The Markov property dictates that the future states of a stochastic process only depend on its current state, not any previous states. In a discrete setting, this can be written as:

https://quant.stackexchange.com/questions/71076/use-of-markov-process-in-option-pricing

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