Ito Calculus is a branch of mathematics that deals with stochastic processes, particularly in the context of finance and economics. It provides a framework for modeling random movements, such as stock prices, using differential equations. This approach is essential for understanding how uncertainty affects various financial instruments. Developed by Japanese mathematician Kiyoshi Ito in the 1940s, Ito Calculus introduces concepts like Ito's lemma, which helps in deriving the dynamics of functions of stochastic processes. It is widely used in quantitative finance for option pricing and risk management, allowing analysts to make informed decisions in uncertain environments.