DEFINITION of 'Trinomial Option Pricing Model'
An option pricing model incorporating three possible values that an underlying asset can have in one time period. The three possible values the underlying asset can have in a time period may be greater than, the same as, or less than the current value.
INVESTOPEDIA EXPLAINS 'Trinomial Option Pricing Model'
The trinomial option pricing model differs from the binomial option pricing model in one key aspect, which is incorporating another possible value in one periods time. Under the binomial option pricing model, it is assumed that the value of the underlying asset will either be greater than or less than, its current value. The trinomial model, on the other hand, incorporates a third possible value, which incorporates a zero change in value over a time period.
This assumption makes the trinomial model more relevant to real life situations, as it is possible that the value of an underlying asset may not change over a time period, such as a month or a year.

Gamma Pricing Model
An equation for determining the fair market value of a Europeanstyle ... 
Option
A financial derivative that represents a contract sold by one ... 
Option Pricing Theory
Any model or theorybased approach for calculating the fair ... 
Binomial Option Pricing Model
An options valuation method developed by Cox, et al, in 1979. ... 
Intrinsic Value
1. The actual value of a company or an asset based on an underlying ... 
Underlying
1. In derivatives, the security that must be delivered when a ...

Options & Futures
Reducing Risk With Options
If you want to use leverage to your advantage, you must know how many contracts to buy. 
Options & Futures
Option PriceVolatility Relationship: Avoiding Negative Surprises
Learn about the pricevolatility dynamic and its dual effect on option positions. 
Options & Futures
How do I measure option liquidity?
An option is a financial instrument that gives the holder the right to purchase shares in a company at a certain set price (strike price) before a set date known as the expiration date. Options, ... 
Options & Futures
Options  Accessing Stakes In Apple At Less Cost
Finding Apple stock costly to trade? Here are multiple ways to trade it through lowcost Apple options. 
Options & Futures
These Are The Top Brokerage Firms For Options Trading
Trading options? Here is the list of the best brokerage firms for options trading, with features, functionality, and brokerage rates. 
Fundamental Analysis
What are the most common issues with Serial Correlation in stocks?
Read about the concept of serial correlation in stock returns, and learn why market analysts are divided about the efficacy of trading based on stock patterns. 
Options & Futures
What is a volatility smile?
Discover what options traders mean when they refer to a "volatility smile," and learn why a volatility smile's existence perplexes many investors and analysts. 
Bonds & Fixed Income
How do I calculate yield to maturity of a zero coupon bond?
Find out how to calculate the yield to maturity for a zero coupon bond, and see why this calculation is more simple than a bond with a coupon. 
Fundamental Analysis
What does the term 'invisible hand' refer to in the economy?
Discover and understand the concept of the "invisible hand" as explained by Adam Smith, considered the founder of modern economic theory. 
Fundamental Analysis
At what level is the current account deficit considered excessive, in terms of percent?
Take a deeper look at the variables that impact current account deficits, and learn why not all types of deficits have equal impacts on a nation's economy.