Excel tool teaches students how to predict option prices accurately.
The article presents a method for teaching the binomial option pricing model in investments courses. The researchers use an Excel spreadsheet with spin buttons to show students how changes in volatility, asset price, and risk-free rate affect the price of a call option. The model allows students to compare option prices with different strike prices and provides a visual representation of option value relative to the underlying asset value. This approach helps students understand the mechanics of option pricing and how different factors influence option prices.