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Home Categories Options and Derivatives The Bermuda option can be exercised early, but only on certain dates before its expiration date. The binomial option pricing model values options using an iterative approach that uses multiple periods to price US options. The Black-Scholes Model, also known as the Black-Scholes-Merton Model (BSM), is a differential equation widely used to price option contracts. Boundary conditions were used to establish the minimum and maximum possible values of call and put options prior to the introduction of binomial tree and Black-Scholes pricing models. A box spread is an option arbitrage strategy that combines buying a bullish call spread with a corresponding bearish put spread. A bull call spread is an option strategy used when a trader bets that a stock will have a limited increase in value. Bull Spread Put is an option strategy that is used when an investor expects a moderate increase in the price of the underlying asset. A bull spread is an optimistic option strategy used when an investor expects a moderate increase in the price of the underlying asset. The butterfly spread is an option strategy that combines bullish and bearish spreads. A buy order to open is commonly used by traders to open positions on a given option or stock.