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Hi I suppose this could relate to all derivatives but I'm particularly interested in equity options. Can someone answer this question. I have always been baffled as to why one would price derivatives using binomial or Black Scholes models for derivative pricing. I am assuming it is so one can work out the price of the option and only trade that option when the market price (separate from the calculated price using Black Scholes or whatever) falls below the calculated price using a derivatives pricing model? Is this a correct assumption or am I completely on the wrong track? Thanks