binomial option pricing model


Method of option pricing that assumes the value of an asset increases and decreases by fixed proportions at a predictable schedule. Possible values of the asset can be predicted starting at the option's expiration date through the final values, which allows an individual to find the current value of the option by working backwards through the asset values by starting with the last known final option value.
Browse Definitions by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
binomial distribution biological assets