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In this example, we derived call and put option price using the binomial model, also known as the Cox-Ross-Rubinstein option model. Note that binomial distribution will become normal when the number of steps (n) becomes large. Hence, when n increases, both of the call and put option prices estimated from the binomial model come close to the prices estimated from the Black-Scholes model.
See Examples below;
Standard Deviation and Mean
>
Lotto Number Generator
>
Playing Card
Probability
>
Normal Distribution Random Number Generator
>
Monte Carlo Integration
>
Black-Scholes Option Pricing Model - European Call and Put
>
Binomial Option
Pricing Model
>
Portfolio Optimization
>
Multiple Regression
>
Bootstrap - A
Non-Parametric Approach
>
Multivariate Standard Normal Probability Distribution
>
Monte Carlo Simulation
>
Option Greeks Based on Black-Scholes Option Pricing Model.
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