@inbook{210d23ecc0454a8eb3a6d79d21ce40d5,
title = "Pricing Options Using Binomial Trees",
abstract = "This chapter presents the binomial tree approach to the option pricing problem. We first illustrate the basic ideas of option pricing by considering the one-period binomial tree model and then extend to a multi-period binomial tree model. We then show that, by taking limits in an appropriate way, the binomial expression for the option price converges to the Black–Scholes option price and pricing equation. Alternatively, the continuous time model can be discretised in a way that yields the same expressions as obtained by the binomial tree approach.",
keywords = "Continuous Time, Continuous Time Model, European Call Option, Option Price, Stock Price",
author = "Carl Chiarella and He, {Xue Zhong} and Nikitopoulos, {Christina Sklibosios}",
note = "Publisher Copyright: {\textcopyright} 2015, Springer-Verlag Berlin Heidelberg.",
year = "2015",
doi = "10.1007/978-3-662-45906-5_17",
language = "English",
series = "Dynamic Modeling and Econometrics in Economics and Finance",
publisher = "Springer Science and Business Media Deutschland GmbH",
pages = "371--387",
booktitle = "Dynamic Modeling and Econometrics in Economics and Finance",
}