Mastering Python for Finance - Second Edition

A class for the trinomial tree option pricing model

Let's create a TrinomialTreeOption class, inheriting from the BinomialTreeOption class.

The methods for the TrinomialTreeOption are provided as follows:

• The setup_parameters() method implements the model parameters of the trinomial tree. This method is written as follows:

def setup_parameters(self):    """ Required calculations for the model """    self.u = math.exp(self.sigma*math.sqrt(2.*self.dt))    self.d = 1/self.u    self.m = 1    self.qu = ((math.exp((self.r-self.div) *                         self.dt/2.) -                math.exp(-self.sigma *                         math.sqrt(self.dt/2.))) /               (math.exp(self.sigma *                         math.sqrt(self.dt/2.)) -                math.exp(-self.sigma *                         math.sqrt(self.dt/2.))))**2    self.qd = ((math.exp(self.sigma *                         math.sqrt(self.dt/2.)) - math.exp((self.r-self.div) ...