yourquant_rick on Instagram: "Itô’s Lemma & Its Power in Finance Itô’s Lemma is like the stochastic calculus version of Taylor series — it tells you how a function of a random variable behaves when the variable itself follows a random walk. 🌪️ Why it matters: In finance, stock prices, exchange rates, and other assets often follow random paths. If you want to know how an option or derivative (a function of these assets) changes in value, Itô’s Lemma is your go-to tool. Example: For a stock S fol