A Binomial Option-Pricing Scheme for Knock-Out Barrier Options

Burak Yıldız ()
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Burak Yıldız: Baskent University

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Abstract: We propose a combinatorial framework that extends the classical binomial option pricing model to incorporate knock-out barrier features. By employing combinatorial analysis, our approach constructs a discrete-time pricing scheme capable of valuing barrier options within the Cox-Ross-Rubinstein (CRR) lattice. This framework aims to provide an alternative formulation that complements existing approaches in the literature.

Keywords: Barrier Options; Binomial Model; Option Pricing (search for similar items in EconPapers)
Date: 2025-11-01
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