Question on Deltas Using Binomial Pricing Models

C

cohenmichaela

Does anyone know why the deltas of an American call and a put calculated using a binomial pricing model would be greater than 1?

I think I've seen this somewhere before but have forgotten the exact reasoning for it.

Thanks,

-Mike
 
Never mind. I think I've found the answer. It has to do with the "early exercise premium" associated with american style puts and also american calls with dividends.
 
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