The document discusses binomial option pricing models. It introduces a simple binomial model to value a call option on a stock priced at $20 that can be $22 or $18 in 3 months. It sets up a riskless portfolio and uses it to derive the option price of $0.633. The document then generalizes the model and introduces risk-neutral valuation, where the expected return on the stock equals the risk-free rate. It revisits the example and values the option at $0.633 using risk-neutral probabilities.