Mastering Python for Finance - Second Edition

A class for European options using a binomial tree

The Python implementation of the binomial option pricing model of a European option is given as the BinomialEuropeanOption class, inheriting the common attributes of the option from the StockOption class. The implementations of the methods in this class are as follows:

1. The price() method of the BinomialEuropeanOption class is the entry point for all the instances of this class
2. It invokes the setup_parameters() method to set up the required model parameters, and then calls the init_stock_price_tree() method to simulate the expected values of the stock prices for the period up until T
3. Finally, the begin_tree_traversal() method is called to initialize the payoff array and store the discounted ...