The Study Of Asian Options Pricing Based On The Binomial Tree Model

Asian option, as the most flourish options in the finance market, the pricing has been focused on always. The binomial tree is one of the numerical methods to price the option in common use. It is intuitive and easy to understand, what's more, it can price not only the European options, but also the American options.In this paper, it is our main work to use binomial tree model to price the Asian option in risk-neutral market. At first, we study the methods of option pricing with the binomial tree model, and the principle of option pricing model with stochastic factor. Then, the qualities of the binomial parameter is researched, we refine the binomial parameter model which is often used with some defects, and construct a new binomial parameter model, with the method of solving many steps moment. What's more, by extending the binomial method, we can deal with path-dependent options, such as Asian options and so on. With applying interpolation and the new binomial parameter model in option pricing, we can use the method of calculating to get its accuracy. In addition, the method of quadratic m, which is used in Asian option pricing model in discrete time periods is introduced. The process to get the results is similar to obtaining the new binomial parameter model above. At last, the application of Asian option are and the popularization of the results in this paper is considered.