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6.6 Binomial Option pricing model – Use of both riskless hedge and the risk neutral approach in Valuation of both European and American call and put options
The Binomial Option Pricing Model is a widely used method for valuing both European and American call and put options. This model incorporates both the riskless hedge approach and the risk-neutral approach to determine option values within a binomial framework. Let’s delve into how these approaches are utilized in the valuation process for European and American options:
