Interview Question for Wealth Management at UBS FInancial Services:

1) stochastic volatility model: Better used to price long term options where volatility is stochastic itself and we have mean reversion.
2) Jump-diffusion models: Better used to price really sort term maturity options which have some significant probability to jump
3) Local volatility models: Just like the stochastic vol model but they dont account for mean-reversion and are intuitively easier.