Python for Finance

Appendix A. Selected Best Practices

Best practices in general are those rules, either written down formally or just practiced in daily life, that may distinguish the expert Python developer from the casual Python user. There are many of these, and this appendix will introduce some of the more important ones.

Python Syntax

One really helpful feature of Spyder as an integrated development environment is its automatic syntax and code checking, which checks Python code for compliance with the PEP 8 recommendations for Python syntax. But what is codified in “Python Enhancement Proposal 8”? Principally, there are some code formatting rules that should both establish a common standard and allow for better readability of the code. In that sense, this approach is not too dissimilar from a written or printed natural language where certain syntax rules also apply.

For example, consider the code in Example 1-1 of Chapter 1 for the valuation of a European call option via Monte Carlo simulation. First, have a look at the version of this code in Example A-1 that does not conform to PEP 8. It is rather packed, because there are blank lines and spaces missing (sometimes there are also too many spaces or blank lines).

Example A-1. A Python script that does not conform to PEP 8

#   Monte Carlo valuation of European call option
# in Black-Scholes-Merton model
#  bsm_mcs_euro_syntax_false.py
import numpy as np
#Parameter Values
S0=100.#initial index level
K=105.#strike price
T= 1.0#time-to-maturity
r=0.05