We are currently working on the "standard" binomial option pricing. If the market agrees that a specific stock will raise by, let's say, 90% next period. At first glance, this seems to have no impact on call option pricing on the stock, because it does not directly enter the valuation.
Is it because, we are assuming that the stock prices already reflect this piece of information about the probability? Or what is the right way to think of how probability enters the model?
