A trinomial tree is a type of mathematical model used in financial mathematics to evaluate options and other derivative securities. It extends the binomial tree model by allowing for three possible outcomes at each step in the model, rather than just two. ### Key Features of a Trinomial Tree: 1. **Multiple Outcomes**: At each node (point in time), the underlying asset price can move in three possible directions: up, down, or stay the same.
New to topics? Read the docs here!