The Binomial Model is useful for understanding the concept of option pricing and can be a step towards understanding more complex models like the Black-Scholes Model. The one-period Binomial Model is a simplified version of the binomial options pricing model that considers only a single time step. This model is often used to introduce the basic concepts of option pricing and is a building block for understanding more complex multi-period binomial models.
Read MoreThis article explain how to evaluate an option using the binomial model. Constructing a replicating portfolio to generate the same cash flow from the option.
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