CFA Level 1 | Derivatives: Binomial Option Pricing Model

[@shiminli3216]

This is extremely helpful for me, thank you!!!! really clear explanation!

[@Hoodiekat827]

so the calculations are not going to come for lvl1?

[@guilhermejanuario3035]

nice presentation style man

[@FabianMoa]

Thanks!

[@beelineunitel]

Hello, I have come across your video and think that it is excellent. I do have a question however - I am seeing that you assume probabilities without computing them, why is that? I would think that probabilities do not play any role in calculating the fair option value, rather we can deduce the probabilities using the option value that we derive from neutral hedge ratio? For instance if I used other arbitrary probabilities, let’s say 0.6U and 0.4D I would get a different option expected value - which would not be possible to hedge with. I would appreciate your answer.