@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{\textendash}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",
}