A Study On European Option Trinomial Pricing Model

European option as the current financial market transactions very active options, its pricing has been widespread concern, and the binary tree method, Trident tree option pricing method is a commonly used numerical methods, they are intuitive and easy to understand, it is generally accepted.This paper mainly studies the risk neutral market in the use of the binomial tree model and trinomial tree model of European option pricing.The article is divided into5parts.First, we introduce the background of financial mathematics, option pricing development; secondly, we introduced the concept of option, option pricing theory, the classical B-S differential equation, moment, moment, probability prior knowledge; the third part, we introduce the use of binary tree model in pricing formula, from which we the parameters that determine the value of option pricing is key, then we assume that the two kinds of cases, and in two of these cases the calculated parameters solution formula; the fourth part, introduced the first Boyle trinomial tree model of option pricing method and its parameters discussed some properties, then we in a reasonable under the assumption that time interval, the trinomial tree model of mean and variance and stock price behavior is derived for the mean and variance equal ideas, construct of trigeminal tree method in a special parameter model, and calculates the parameters of the formula, the fifth part, through a a European put option example of a numerical comparison, under the assumption that the special triple tree model than the binomial parameter model have higher accuracy.Finally, is the conclusion, the content of the paper summarized and the further work.