Business, Management and Accounting
5 years ago

Binomial tree method converges to Black Scholes model for stock options.

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IOP Conference Series Materials Science and Engineering
Convergence of binomial tree methods to Black Scholes model on determining stock option prices
Riaman Riaman, Kankan Parmikanti, I Irianingsih, K Joebaedi, Sudradjat Supian

Paper Summary

The article discusses how to determine the price of stock options using the Binomial Tree method and the Black Scholes method. Factors like stock prices, strike prices, maturity, volatility, and interest rates affect option prices. The study focused on European call options for Bank Central Asia shares and found that the Binomial Tree method converges to the Black Scholes method as the time partition increases.

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