Explain 'Monte Carlo' for option pricing.

Approach: Describe simulating price paths to estimate option value.

A method to price options by simulating thousands of possible future price paths of the underlying asset under a risk-neutral measure, calculating the payoff for each, and averaging/discounting them back to today.

Follow-up: Can Monte Carlo be used for American options easily?

Key concepts: geometric brownian motion, payoff average, discounting.