White Papers

How to "Excel" at Options Valuation: Build a Flexible, Spreadsheet-Based Lattice Model for Better Calculations

• Tags:
• stock,
• assumptions,
• stock options,
• lattice

Overview This paper provides detailed instructions for building a lattice model by making the necessary calculations in Excel. One company that chose to implement such a model is the Marysville, Ohio-based Scotts Co., a manufacturer of horticultural products. They preferred the lattice model because of its exceptional ability to capture assumptions about options' term and volatility. Because the lattice model makes it easy to vary assumptions and inputs over time, entities that grant a great many stock options to their employees will prefer its flexibility to the relatively rigid restrictions of the Black-Scholes-Merton model, which is more suitable for companies whose employee compensation includes few stock options.

• 
• Did you find this white paper useful? 3 out of 6 users found this white paper useful

• Subscribe to the IT White Papers Newsletter
• White Paper RSS