Binomial Option Pricing Model (Calculations for CFA® and FRM® Exams)

[@lwc888]

You are the clearest CFA instructor I have seen on youtube!

[@analystprep]

Glad you think so!

[@lukashuber389]

I'm studying economics in my Master. I had binomial option pricing in two different courses with two different Professors already, and in both cases, I didnt really understood the Idea. You just managed, what my professors failed to achieve, within 20 minutes. Just amazing!!! Thank you very much!

[@aastha647]

im doing my economics bsc final year rn, and he explained it so well! lecturers make it so confusing!

[@rajaneeshkataru3821]

No words to praise clear, simplified and intuitive, keep it up!!!

[@reddyboss]

Not just the best explanation but also the way it is structured is awesome.

[@saif0]

Thank you so much. Your video helped me understand this topic during my MS accounting and finance studies.

[@vanessavimbai6950]

THANK YOU , love from zimbabwe

[@analystprep]

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[@sanchitjain6674]

Crisp and smooth explanation

[@newmercies1]

Excellent explanation. As clear as it gets. Thank you so much.

[@analystprep]

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[@TrishChandirekera]

Very clear explanation thank you

[@Jessica-ql5ji]

Thank you so much, this video was very clear and helpful.

[@analystprep]

Glad it was helpful! If you like our video lessons, it would be appreciated if you could take 2 minutes of your time to leave us a review here: trustpilot.com/review/analystprep.com

[@luisfollmer4950]

Great video.

[@robely8711]

Great explanation, thank you so much!

[@LaizaMacheka]

great explanation..thank you sir

[@shanifibnushereef8102]

Very nice explanation

[@analystprep]

Thanks for liking!

[@deded846]

Qn: What if U < D, then how would the probability formula work (since the denomoinator would be negative)

[@kvafsu225]

Great presentation. Thanks

[@yuki-te1ir]

you are my lifesaver

[@yashbhartia9981]

very helpful!

[@brighttchoka8109]

Well explained.

[@lukekaram7848]

Thank you for this 🙏

[@analystprep]

You’re welcome 😊 If you like our video lessons, it would be appreciated if you could take 2 minutes of your time to leave us a review here: trustpilot.com/review/analystprep.com

[@bishwajitchowdhury]

Excellent 😮

[@anammurad4908]

Perfecttttt Explanation, thank you 🙏

[@analystprep]

Glad it was helpful! If you like our video lessons, it would be appreciated if you could take 2 minutes of your time to leave us a review here: trustpilot.com/review/analystprep.com

[@Lilmissyaz]

Amazing explanation thanks so much

[@BankoleSamson-ky8ex]

well explanatory

[@ShankuBiswas-io7uh]

Thanks

[@DjF6Official]

What if the strike and current price are not the same, how do you go about it?

[@dr.ratnasinha9005]

A stock is currently trading@Rs 120. It can either 80 upto Rs 132 or fall to Rs 105 period of three month. If the risk free rate is 9%, what is the value of call option with exos a strike price of 125 by Binomial method of valuation? Apply Put-call parity equation and determine the value of put option.

[@joyKarmakar-n2d]

in this video k means current stock pricr or strike price

[@abditajirhassan3447]

I hv understood, much thnks.

[@theniftytrade5807]

Hy sir, I background is from derivatives trading and i did start derivatives but problm does come when mathematical areas come. So should i ready frist QM or keep effort to understand the things...

[@nekamolwithshanti3423]

Sir, please tell me about the value 1.06.

[@dompatrick8114]

This is fucking good, thanks for being succinct and informative.

[@analystprep]

Glad it was helpful! If you like our video lessons, it would be helpful if you could take 2 minutes of your time to leave us a review here: www.trustpilot.com/review/analystprep.com

[@nekamolwithshanti3423]

How can we get the value of 1.06?

[@patrickdelaney5341]

6% is the risk free rate. If you have $100 and want to know what you will have in the bank in 1 year, you take 100 x 1.06= $106 Discounting is the reciprocal of compounding. If there is $106 in 1 year, to get the present value, you take 106/1.06=$100

[@abditajirhassan3447]

Thnks

[@benpierce2202]

Nice explanation, but I find the notation using superscript 2 to be confusing. It usually denotes squaring. Periodicity would usually be represented by a subscript. Also, there was no explanation for why you couldn't have different P, 1 - P probabilities in each period. Finally, why D factor is 1/1.25 rather than 1 - 0.25 ? That doesn't make intuitive sense.

[@akshitakshitpatidar2738]

Fucking good