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Net assets position in binomial model options?

ayesha (mcom) (1185 Points)

05 February 2012

in binomial model, net assets position= value of assets -value of liabilities

that means value of share- value of option payable to buyer?

why is option payable by seller to buyer which is deducted? how can buyer receive amount? plz explain.

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Originally posted by : ayesha
	in binomial model, net assets position= value of assets -value of liabilities that means value of share- value of option payable to buyer? why is option payable by seller to buyer which is deducted? how can buyer receive amount? plz explain.

Basics of an Option is that the buyer has a right (to buy in CALL and to sell in PUT) so the seller may have to pay at the expiry of the option a VALUE on expiry (VALUE not amout)...thou i still dindnt get how is it relvent in "Binomial model"