then somebody should tell those guys who create the binomial options pricing model (and by extension, black-scholes) how flawed their approach is! =P https://e

then somebody should tell those guys who create the binomial options pricing model (and by extension, black-scholes) how flawed their approach is! =P https://en.wikipedia.org/wiki/Binomial_options_pricing_model https://en.wikipedia.org/wiki/Binomial_options_pricing_model seriously though, the example is just a model, and a simple one at that. it's certainly useful to call out where and how the model breaks down, but it's also useful to understand the conditions under which a model performs well. like most models, this one is not designed for black swan events (to which you allude). also, the author acknowledges your point at the end: "...it is only part of a financial modeling solution" and "one needs ... to learn more through careful experimentation and study". you'd need to include some information about the magnitude of losses and gains, to be sure. i do like that he used a relatable example like sentiment analysis though.