Option Binomial Tree Algorithm Implementation

This implementation presents the binomial tree algorithm for option pricing, a fundamental discrete-time model in financial mathematics. The algorithm constructs a lattice structure to approximate the underlying asset's price movement over time, incorporating probability theory and statistical analysis to value various options including stocks, currencies, and commodities. The MATLAB implementation typically involves key components such as: calculating up/down movement factors based on volatility, determining risk-neutral probabilities, building the price tree through recursive calculations, and working backward through the tree to compute option values at each node. Core functions likely include asset price path generation, probability-weighted discounting of future cash flows, and handling both European and American-style exercise features. This project provided valuable hands-on experience in implementing financial models computationally, enhancing understanding of both the mathematical foundations and practical programming aspects. The code structure would typically feature vectorized operations for efficient tree construction, parameter validation for inputs like volatility and risk-free rate, and flexible design to accommodate different option types and pricing scenarios.