Lean derivation of the CRR pricing formula

We provide a lean non-technical exposition on the pricing of path-dependent and European-style derivatives in the Cox-Ross-Rubinstein (CRR) pricing model. The main tool for cleaning up the reasoning is by using static hedging arguments. This can be accomplished by taking various routes through some auxiliary considerations, namely Arrow-Debreu securities, digital options or backward processes when the CRR model is extended to an infinite state space. The latter also leads to an interesting new phenomenon. At the end we discuss the issue with the trend parameter $\mu$.