Decision Sciences
2 years ago

New study reveals diverse methods for pricing options offer price ranges.

BCP Business & Management
Option Pricing Based on Black-Scholes Model, Monte Carlo Method and Binomial Tree Model
Yutong Xiao

Paper Summary

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The article compares different methods to price options for popular companies like Alphabet, Amazon, and Tesla. By using Python code, the researchers applied three models to calculate option prices based on historical market data. The Black-Scholes model, Monte Carlo method, and Binomial Tree model were used to determine price ranges for the options. The results show variations between the methods, providing insights into how to effectively price options for investment purposes.