Improvement of using binomial tree method in pricing options

The Binomialtreemethodisoneofthebasicmethodsofpricingoptions. Sincethepayofffunctions in financial market are often not smooth,the rate of convergence of pricing by the binomial model is reduced. The improvements on the accuracy of pricing options by binomial tree method,such as Black-scholes adjustment and extrapolation,were presented and discussed in detail. By using these techniques,the efficiency of computing in binomial method for pricing options can be significantly improved. Experimental results demostrate the effectivess of these improvements.