# Bionomial move down

I saw two different version of mock answer for calculating stock bionomial move down.

If stock P=30, move down by 20%. One version calculated as 30*0.8, but another as 30/1.2.

Which one should we use?

the probability of an up movement = (1+r-amt of down)/(amt of up - amt of down)

amt of up if 15% increase = 1.15, which implies a down movement of 1/1.15

probability of down movement = 1 - probability of up movement

But sometimes it gives you both, say up move is 15%, but down move is 20%.

My question is how to calculate the down move… cuz the answer show two different versions.

If they give both the amount of up and down movement, I generally use those numbers to calculate the probability of an up movement: so, (1 + r - .8 )/ .35

then 1- the answer from above is down movement prob

Sorry… maybe we are not talking about the same thing… Hope anyone can help…

If they give you the size of the down move, you need to use the figure they give you. If they do not, then calculate it yourself.

That does make sense. But if they give you down move 20%. Do you use P/1.2 or P*0.8? Please clarify. ty

if they give u the up move and the down move, great no question asked right ?

if they give u the up move only then the down move is 1-1/UP but remember if UP is 15% then down is -11/1.15 i.e. it is the factor that u use to calculate the move size not the %

if they give u the up move and the down move, great no question asked right ?

if they give u the up move only then the down move is 1-1/UP but remember if UP is 15% then down is -11/1.15 i.e. it is the factor that u use to calculate the move size not the %

Okey. So now they give you P=30, down move is 20%, what’s the first period down move price then?

1-0.2 = 0.8 so P(d) = P x 0.8

if they give you D use that, if not then use 1/u