A jump diffusion model is a mathematical framework used to describe the dynamics
of an asset's price or other financial variables that exhibit both continuous changes (diffusion)
and sudden, discontinuous changes (jumps). It is a popular model in quantitative finance for
capturing the presence of unpredictable, significant price movements or events in financial
markets. Jump diffusion models have various applications in quantitative finance, particularly
in option pricing, risk management, and the analysis of market dynamics. They allow for a more
accurate representation of market behavior by incorporating sudden, unpredictable price
movements. However, it's worth noting that jump diffusion models are just one way to capture
jumps in asset prices, and other models, such as stochastic volatility models, can be used
depending on the specific requirements and characteristics of the financial data.