The Binomial Options Pricing Model is a mathematical method used to evaluate the price of options. It works by creating a model that simulates possible future movements in the price of an underlying asset, such as a stock. The model divides the time until the option's expiration into several intervals, allowing for two possible price movements—up or down—at each step. This approach results in a binomial tree, where each node represents a possible price at a given time. By calculating the option's value at each node and working backward to the present, traders can determine the fair price of the option. This model is particularly useful for American options, which can be exercised at any time before expiration.