Complex sentence: Financial models with long-tailed distributions and volatility clustering have been introduced to overcome problems with the realism of classical financial models; jump diffusion models allow for (option) pricing incorporating "jumps" in the spot price.
Split into simpler sentences: Financial models with long-tailed distributions and volatility clustering have been introduced to overcome problems with the realism of classical financial models. Jump diffusion models allow for (option) pricing incorporating "jumps" in the spot price.