I have discussion with my colleague on why a general assumption $$ud=1$$ in binomial tree option pricing model would be necessary?
I take it a simplification of the problem, otherwise, there will be more intermediate nodes in the tree, which will be hard to compute. While my colleague insists that since the underlying is often lognormal with 0 mean, $ud=1$ were a fair assumption.
I think his explanation is acceptable. The question, is there any other reason to make $ud=1$ assumption?