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Options Pricing Training: Binomial Trees

Binomial Trees

This course focuses on an alternative method of implementing a two-dimensional binomial tree compared to the traditional method of building a binomial tree presented in most option pricing text books. The alternate approach is based on the techniques documented by Professor Mark Broadie at Columbia Business School as part of his coursework in Security Pricing and Computational Finance courses at Columbia University and allows us to extend a simple 3 step tree to a 50 – 100 step option pricing tree in a few minutes.

The course starts with pricing European calls and put options, followed by pricing American options and closes by reviewing option pricing for Knock out and Knock in (Sudden Death). We also review the special case of a down and in option.

Options Pricing – Using binomial trees to price options in a spreadsheet
Options Pricing – Pricing Call Options – Option pricing spreadsheet – Binomial trees
Options Pricing – Pricing American Options – Calls and Puts – Spreadsheet implementation – Binomial trees
Options Pricing – Pricing Put Options – Option pricing spreadsheet – Binomial trees
Options Pricing–Exotics Options–Pricing a Capped Call–Binomial trees
Options Pricing – Pricing Knockout exotic options – Sudden Death Options – Down and out call options
Options Pricing – Binomial Trees – Pricing Sudden death Options – Down and in call options

If you would like to purchase and download the excel examples covered in this course, please checkout ouronline option pricing course store for handy pdf course cheat sheet downloads and solved excel spreadsheets and templates. If you need a option and derivatives product refresher, please see the introductory and intermediate courses below on Derivatives and Options products.

The Derivatives Crash Course for Dummies
Options and Futures basic products training course

Derivatives for Dummies – a first look at options and derivatives

A quick look at basic concepts and vanilla options as well as synthetic manufacturing of options at a higher level of detail. The Derivatives for dummies crash course is followed by an intermediate level course that reviews product variation and basic pricing concepts.

Options and Futures Training: Options and derivatives crash course: Terminology
Options and Futures Training: Options and Derivatives Crash Course: Forward, Futures and Options
Options and Futures Training: Options and Derivatives Crash Course: Payoff profiles – Forwards
Options and Futures Training: Options and Derivatives Crash Course: Payoff profiles – Options, Calls and Puts
Options and Futures Training: Options and Derivatives Crash Course: Synthetics

Derivative products

The second course on derivatives and options products digs a little deeper into products, pricing, sensitivities and product variations over ten easy to read chapters. Starting again from vanilla products we touch upon options on currencies and Forex, options on interest rates, forwards, futures an Interest Rate Swaps.

Options and Futures Training: Derivative Products: Review
Options and Futures: Derivative Products: Vanilla Products
Options and Futures Training: Derivative Products: Pricing Basics
Options and Futures Training: Derivative Products: Greeks and Binomial Trees
Options and Futures Training: Derivative Products: Options on shares, stocks, currencies and equities
Options and Futures Training: Derivative products: Exotic Options
Options and Futures Training: Derivative products: Options on rates
Options and Futures Training: Derivative Products: Forwards
Options and Futures Training: Derivative Products: Futures
Options and Futures Training: Derivative Products: Swaps

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