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what does "the lattice of the underlying" mean here? Options
takka1372
Posted: Tuesday, November 23, 2021 8:24:12 AM
Rank: Newbie

Joined: 7/15/2021
Posts: 1
Neurons: 675
At least two lattices are needed in the RNP approach. Firstly, the lattice of the underlying (event tree) must be constructed. It was calculated beginning with the starting node
and proceeding left to right till real options expiration. Secondly, real option valuation
lattice is developed and calculated in the opposite direction, back to the starting node. This
approach is both a “road map” and a valuation tool. For descriptive appeal, both may be
also merged into one lattice (Mauboussin 1999; Copeland et al. 2000, pp. 407–13).
thar
Posted: Tuesday, November 23, 2021 9:20:42 AM

Rank: Advanced Member

Joined: 7/8/2010
Posts: 25,449
Neurons: 103,256
Are you sure you have the brackets in the correct place? Because you should be able to remove the brackets (which just give an alternative label) and still be left with a noun.

The lattice of the underlying event tree.

The fundamental structure.
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