  The dynamics of market prices is described as the evolution of opinions in
the trading community regarding future market behavior. The price then is a
function of the voting process of the market players in favor to raise or
reduce the value of a stock. The model presented in this paper is suited for
pricing of options and was verified against real market data. The model allows
deriving the parameters of market players from available real market data,
especially maximum possible correlation (herding) and anti-correlation between
the players' opinions. The deviations of market prices from those predicted by
the Black-Scholes model, such as smile and skew implied volatilities, are
interpreted as the current values and limits of social influence of the market
players, respectively. To the best of our knowledge, this is the first work
that discriminates skew and smile phenomena. Our approach unifies and develops
a further connection between trading, voters' model, and statistical physics
analogies of opinion dynamics.

Statistical Finance;Physics and Society