DEFINITION of 'Down Transition Probability'
The probability that an asset's value will decline in one period's time within the context of an option pricing model. The option pricing models using a down transition probability are both the binomial and trinomial option pricing models.
INVESTOPEDIA EXPLAINS 'Down Transition Probability'
In a binomial option pricing model, the probability that an option's underlying asset declines in value over a time step may be denoted by 1Qu, where Qu represents the probability that the option's underlying asset will increase over the next time step in decimal form.
Under the trinomial model, the probability of a down transition is equal to the probability of an upward transition or an equal transition over the next time step not happening. If we denote Qu as the probability of the underlying asset increasing in value over the next time step, Qd as the probability the value of the underlying asset will decrease over the next time step, then the probability that the underlying asset's value stays the same is 1QuQd.

Trinomial Option Pricing Model
An option pricing model incorporating three possible values that ... 
Option
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Derivative
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Embedded Option
A provision in a security that is an inseparable part of the ... 
Intrinsic Value
1. The actual value of a company or an asset based on an underlying ... 
Binomial Option Pricing Model
An options valuation method developed by Cox, et al, in 1979. ...
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