Document Type

Video

Publication Date

Spring 2021

Abstract

Stock options can be a useful tool in any investor’s portfolio. They allow the skilled investor to increase their leverage and possibility for a higher payout with less risk. However, they are only beneficial if the investor knows how to use them, and if they accurately reflect the price of the option. This presentation hopes to offer some insight into the binomial method of options pricing along with new adjustments to the model in hopes of reflecting a more accurate options price. This, along with the Monte Carlo simulation presented, will hopefully offer some insight into the mathematical investor’s toolbox.

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