Combinative Application Of Two Kinds Option Pricing Model

With the rapid development of financial market, the derivative products are increasingly rich, the attendant risks will gradually appear. It’s hard for conventional financial tools to overcome their own defect.So it is in urgent need for the market to find such financial instrument which can not only reduce the investor’s investment risk, but also can promote the rapid and healthy development of the market.As a good tool for hedging and risk management option which meets the requirements to control market risk can decrease the risk of basic products. Along with the increasing of people’s ability to judge the market trend, opt ion possesses new function such as speculation which is similar to stocks.bonds and other traditional securities.So It plays a role in the price discovery, maintaining market stability and activating the market.This paper mainly introduces the development process of the generation and pricing theory of option and introduces the two binomial tree pricing model and pricing of B-S emphatically.In this paper, statistical methods are used for fitting analysis of the two models to prove the their accuracy fully. The advantages and defects of the two options are analyzed from two aspects of theory and data. Then, weights are allocated to two models according to the data validation in order to posess the superiority of two models. This method is used to forecast the option price of the next trading day and corresponding success rate are given for investors. Finally operation suggestions for investors are put forward according to market direction.