This project focuses on pricing of European options. European options are options that gives the buyer right, but not the obligation to buy (call option) or sell (put option) an underlying asset at a specific price (strike price) on a specific date (expiration date).

In this notebook a few of the most popular option trading strategies are implemented (Long Straddle, Covered Call, Bear Put Spread, Long Call Butterfly Spead) showing their respective payoff-functions.

In the simplest version of option pricing for traded stocks realized volatility is used as an estimate for future volatility. Here, convergence of pricing in binomial model to Black-Scholes is shown.