Binomial option pricing model


Also found in: Acronyms.

Binomial option pricing model

An option pricing model in which the underlying asset can assume one of only two possible, discrete values in the next time period for each value that it can take on in the preceding time period.
References in periodicals archive ?
She used the Cox, Ross, and Rubinstein's (1979) Binomial Option Pricing model (BOP) to estimate the contract valuation.
A binomial option pricing model (Hull, 2008; Luenberger, 1998) based on the standard risk-neutral valuation approach (Trigeorgis, 1996) is used to evaluate the flexible lease with the cancelation option under the uncertainty about the future corporate rental rate as summarized below.
5) Evnine and Rudd further conclude that these options are significantly mispriced relative to theoretical values based on the binomial option pricing model.
Implementing this method requires the more complicated binomial option pricing model.