What are the limitations of using binomial option pricing models for pricing Ethereum options?

1 answers

• Jadid idFeb 26, 2021 · 4 years ago
  When it comes to pricing Ethereum options, using binomial option pricing models has its limitations. These models assume that the price of Ethereum follows a binomial distribution, which may not capture the complex price dynamics of Ethereum. Moreover, these models do not consider factors such as market sentiment and news events, which can have a significant impact on the price of Ethereum. As a result, the pricing obtained from these models may deviate from the actual market prices of Ethereum options. It is important to consider these limitations and use alternative pricing models or incorporate additional factors to improve the accuracy of pricing and risk management for Ethereum options.
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