Binomial Option Pricing Models

For the ready-made calculator, go to Binomial Option Pricing Calculator.

For the Excel tutorial where you build your own, go to Binomial Option Pricing Excel Tutorial.

For individual model formulas and reference, see:

About Binomial Option Pricing Models

A binomial model is one that calculates option prices from inputs (such as underlying price, strike price, volatility, time to expiration, and interest rate) by splitting time to expiration into a number of steps and simulating price moves with binomial trees.

The first complete binomial option pricing model (known as Cox-Ross-Rubinstein or CRR) was presented by John C. Cox, Stephen Ross, and Mark Rubinstein in 1979, but a number of other binomial models exist.

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