Questions about Deriving the Vanna Formula

Discussion in 'Options' started by NaturallyNick, Jan 7, 2022.

  1. In the below image, on step 5, they have the formula:

    e^(-qt)*sqrt(T-t)* N'(d1)(d2/σ)


    Step 6, they adjust the bolded part to:

    e^(-qt)*sqrt(T-t)* N'(d1)(1-d1)

    and I can't seem to figure out how they did it. I'd be grateful if anyone had a little bit of knowledge they'd want to share. (I included the part about vega formula below this image and a link to the actual PDF as well.)

    upload_2022-1-7_8-29-48.png
    upload_2022-1-7_8-35-57.png upload_2022-1-7_8-29-48.png upload_2022-1-7_8-35-57.png

    https://acfr.aut.ac.nz/__data/assets/pdf_file/0017/185300/172496-K-Huang-Vanna-Volga_Auckland.pdf

    Cheers,
    NN