Why Option Prices Don't Depend on Probability скачать в хорошем качестве

Why Option Prices Don't Depend on Probability

Two traders disagree on whether a stock will go up or down — yet they arrive at the exact same option price. This video builds a one-period binomial model from scratch to show why real-world probabilities cancel out of option pricing entirely, and how replication and no-arbitrage arguments replace forecasting with financial engineering. Key concepts covered: • Binomial option pricing model with a concrete numerical example (S₀ = $20, strike = $15) • Replicating portfolios: matching option payoffs with stock and bonds • Why the real-world probability p never enters the pricing formula • Risk-neutral probabilities (θ) as a mathematical pricing tool, not a market belief • The equilibrium condition d ‹ r ‹ u and why both assets must coexist • Arbitrage enforcement: how mispricing creates riskless profit opportunities • The conceptual bridge from binomial trees to Black-Scholes ORIGINAL SOURCE This video is based on content from the following source:    • Ses 12: Options III & Risk and Return I   All credit for the original educational content belongs to the original creator. About Ludium Learn. Play. Discover. Ludium distills long lectures into focused concept videos, making complex ideas accessible and precise. GitHub: https://github.com/Augustinus12835/au... #OptionPricing #RiskNeutralPricing #BinomialModel #DerivativesPricing #NoArbitrage #QuantitativeFinance #FinancialEngineering #ReplicatingPortfolio