Binomial Tree Option Pricing API

Binomial tree option pricing model implementation.

binomial_tree(option_type, underlying_price, strike_price, time_to_expiry, risk_free_rate, volatility, steps=100, dividend_yield=0.0)

Calculate option price using the binomial tree model.

Parameters:

Name	Type	Description	Default
option_type	str	Type of option ('european_call', 'european_put', 'american_call', 'american_put')	required
underlying_price	float	Current price of the underlying asset	required
strike_price	float	Strike price of the option	required
time_to_expiry	float	Time to expiration in years	required
risk_free_rate	float	Risk-free interest rate (annualized)	required
volatility	float	Volatility of the underlying asset (annualized)	required
steps	int	Number of time steps in the binomial tree, by default 100	100
dividend_yield	float	Continuous dividend yield, by default 0.0	0.0

Returns:

Type	Description
dict	Option price and details

Raises:

Type	Description
ValueError	If option_type is not one of 'european_call', 'european_put', 'american_call', 'american_put' If underlying_price or strike_price is not positive If time_to_expiry is not positive If volatility is not positive If steps is not a positive integer