Option Pricing: Project – Option Pricing – It is recommended that you use binomial trees to value the options, and you are required to use at least four step trees Custom Essay

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It is recommended that you use binomial trees to value the options, and you are required to use at least four step trees. Also you may increase the number of trees for more accurate result and compares the value of call option with the quoted price. (You may choose the same strike price as the quoted one instead of using the average stock prices in this American call option case.)
Please include the following in your report;
How you get the data from internet;
Each step of the calculations for the variables;
How to construct the binomial tree;
Each step of the calculations for every node in the tree;
Your pricing results;
Explanations and analysis on your findings.
(Double space, font size 11 with exhibits to show the binomial tree and calculation steps.)
Shout option definition:
A shout option is a European option where the holder can “shout” to the writer at one time during its life. At the end of the life of the option, the option holder receives either the usual payoff from a European option or the intrinsic value at the time of the shout, whichever is greater.

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