Implied binomial tree

An implied binomial tree is a way to work out the price of something like a stock or options. It is a chart of numbers made up of rows and columns that looks like a tree. On each row, there are two possible prices of the stock, and each column represents a different time period such as a month. To use the tree, you start at the last column and compare the two numbers on the bottom row - the number on the left is the price if the stock goes down, and the number on the right is the price if the stock goes up. You then look at the row above it, and see what the prices for the stock are for the row before that and so on, until you get to the first column. By looking at all of the numbers and comparing them, you can work out the price of the stock or options in the present day.