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Journal articles on the topic 'Real Option'

Author: Grafiati

Published: 4 June 2021

Last updated: 25 July 2025

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1

Munoz Cabanes, Alberto, Alfonso Herrero de Egana, and Arturo Romero. "Real option analysis. The viability of real estate projects." Investment Management and Financial Innovations 17, no. 4 (2020): 271–84. http://dx.doi.org/10.21511/imfi.17(4).2020.24.

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Traditional methods used for real estate project valuation, such as the static Net Present Value, have some limitations, as these methods do not consider the possibility of a change in the initial conditions of the project or during its development. On the other hand, the real options approach allows for flexibility in evaluating a real estate project, improving the decision-making process as it helps identify the optimal strategy and timing for the construction phases. The paper deals with evaluating an actual real estate project in La Rioja (Spain) using different options to estimate its fin

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2

Krüger, Niclas A. "To kill a real option – Incomplete contracts, real options and PPP." Transportation Research Part A: Policy and Practice 46, no. 8 (2012): 1359–71. http://dx.doi.org/10.1016/j.tra.2012.04.009.

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3

Li, Songsong, Yinglong Zhang, and Xuefeng Wang. "The Sunk Cost and the Real Option Pricing Model." Complexity 2021 (September 30, 2021): 1–12. http://dx.doi.org/10.1155/2021/3626000.

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Although the academic literature on real options has grown enormously over the past three decades, hitherto an accurate real option pricing model has not been developed for investment decision analyses. In this paper, we propose a real option pricing model based on sunk cost characteristics, which can estimate the value of real options more accurately. First, we explore the distinctive features that distinguish real options from financial options. The study shows that the distinguishing feature of the real options is the sunk cost, which does not exist in the financial options. Based on the su

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Mintah, Kwabena, David Higgins, Judith Callanan, and Ron Wakefield. "Staging option application to residential development: real options approach." International Journal of Housing Markets and Analysis 11, no. 1 (2018): 101–16. http://dx.doi.org/10.1108/ijhma-02-2017-0022.

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Purpose Real option valuation is capable of accounting for uncertainties in residential development projects but still lacks practical adoption due to limited evidence to support application of the theory in practice. The purpose of this paper is to use option valuation to value staging option embedded in residential projects and compare with results from DCF to determine which of the two methods delivers superior results. Design/methodology/approach The fuzzy payoff method (FPOM), a real options model that uses scenario planning approach to generate a range of figures, from which a single-num

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5

Čirjevskis, Andrejs. "Exploring the Usefulness of Real Options Theory for Foreign Affiliate Divestments: Real Abandonment Options’ Applications." Journal of Risk and Financial Management 17, no. 10 (2024): 438. http://dx.doi.org/10.3390/jrfm17100438.

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Scholars propose that future research on real options theory should shift attention away from option buying during the first investment stage and toward option execution after investment. Researchers maintain that it would be interesting to explore the circumstances under which investors decide to withdraw their investments, thereby exercising the option to abandon their investments. The present research seeks to fill the gap in the literature and investigate the applicability of real options theory when an organization enhances sustainability policies while focusing on disciplined capital all

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Adetunji, Olubanjo Michael, and Akintola Amos Owolabi. "Valuation of Interacting Time-to-Build and Growth Real Options in Infrastructure Investments." International Journal of Economics and Finance 8, no. 12 (2016): 202. http://dx.doi.org/10.5539/ijef.v8n12p202.

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This paper argues that real options approach presents a better valuation approach for valuing infrastructure investments when compared to traditional discounted cash flow approach. Managerial flexibilities, in various forms of real options, can be incorporated into infrastructure projects to expand the projects’ values. The paper identifies two key types of real options present in infrastructure investments as time-to-build and growth options and extends an earlier developed closed-form option valuation formula to value these options. The paper uses a numerical case of investment in railroad i

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Décaire, Paul H., Erik P. Gilje, and Jérôme P. Taillard. "Real Option Exercise: Empirical Evidence." Review of Financial Studies 33, no. 7 (2019): 3250–306. http://dx.doi.org/10.1093/rfs/hhz092.

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Abstract We study when and why firms exercise real options. Using detailed project-level investment data, we find that the likelihood that a firm exercises a real option is strongly related to peer exercise behavior. Peer exercise decisions are as important in explaining exercise behavior as variables commonly associated with standard real option theories, such as volatility. We identify peer effects using localized exogenous variation in peer project exercise decisions and find evidence consistent with information externalities being important for exercise behavior. (JEL G30, G31, G32)

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8

Witjaksono, Armanto. "Real Option Analysis (ROA)." Winners 4, no. 1 (2003): 54. http://dx.doi.org/10.21512/tw.v4i1.3804.

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9

Brandão, Luiz E., and James S. Dyer. "Decision Analysis and Real Options: A Discrete Time Approach to Real Option Valuation." Annals of Operations Research 135, no. 1 (2005): 21–39. http://dx.doi.org/10.1007/s10479-005-6233-9.

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10

Baev, Leonid, and Olga Egorova. "DEVELOPMENT OF THE THEORY OF REAL OPTIONS AS A TOOL FOR ADAPTIVE MANAGEMENT OF INVESTMENT PROJECT EFFICIENCY." Bulletin of the South Ural State University series "Economics and Management" 18, no. 2 (2024): 75–90. http://dx.doi.org/10.14529/em240206.

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The article is devoted to the issues of correct assessment and management of optional invest-ment projects in real assets. The research methodology is based on the principles of rational multicriterial deci-sion-making in conditions of uncertainty, which determines not only risks, but also opportunities to improve the efficiency of projects, through the a priori introduction of options into the projects, allowing the use of probable opportunities. The study analyzes various approaches and methods of assessing the efficiency of investment projects and the value of real options. It shows that th

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11

Cong, Lin William. "Timing of Auctions of Real Options." Management Science 66, no. 9 (2020): 3956–76. http://dx.doi.org/10.1287/mnsc.2019.3374.

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This paper endogenizes auction timing and initiation in auctions of real options. Because bidders have information rent, a seller faces a “virtual strike price” higher than the actual exercise cost. The seller inefficiently delays the auction to encourage bidder participation and uses the irreversible nature of time to gain partial control over option exercises. The seller’s private benefit at option exercise may restore efficient auction timing, but option exercises are always inefficiently late. When the seller lacks commitment to auction timing, bidders always initiate in equilibrium, resul

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Klepáč, Václav, Petr Kříž, and David Hampel. "Real options analysis in the engineering company practice." Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis 61, no. 7 (2013): 2303–9. http://dx.doi.org/10.11118/actaun201361072303.

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In this paper, we deal with the real options analysis of selected investment projects. This approach is supplemented and compared to calculations of the net present value (NPV). Two research problems are analyzed: acquisition of the simulation software for the foundry industry in the sense of the expansive options and options on leaving the project in the case of acquisition of the spectrometer. For the option valuation, there were used analytical and numerical methods like the Black-Scholes model, binomial model and Monte Carlo simulations. In the case of binomial pricing model we used modifi

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13

Morreale, Azzurra, Luigi Mittone, Thi-Thanh-Tam Vu, and Mikael Collan. "To Wait or Not to Wait? Use of the Flexibility to Postpone Investment Decisions in Theory and in Practice." Sustainability 12, no. 8 (2020): 3451. http://dx.doi.org/10.3390/su12083451.

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Business sustainability and real options are closely connected, as real options are managerial flexibility that allows organizations to adapt to changes in their environment, thus making the organization more robust and economically sustainable. Studies in real options theory abound, yet there is still a lack of evidence on whether people make decisions consistently with the predictions made by real options models. We run a laboratory experiment to study the role of option value and the laboratory time required to resolve uncertainty in individuals’ decision to price and adopt an option to wai

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Rakic, Biljana, and Tamara Radjenovic. "Real options methodology in public-private partnership projects valuation." Ekonomski anali 59, no. 200 (2014): 91–113. http://dx.doi.org/10.2298/eka1400091r.

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PPP offers numerous benefits to both public and private partners in delivery of infrastructure projects. However this partnership also involves great risks which have to be adequately managed and mitigated. Private partners are especially sensitive to revenue risk, since they are mostly interested in the financial viability of the project. Thus they often expect public partners to provide some kind of risk-sharing mechanism in the form of Minimum Revenue Guarantees or abandonment options. The objective of this paper is to investigate whether the real option of abandoning the project increases

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15

Collan, Mikael, Robert Fullér, and József Mezei. "A Fuzzy Pay-Off Method for Real Option Valuation." Journal of Applied Mathematics and Decision Sciences 2009 (June 17, 2009): 1–14. http://dx.doi.org/10.1155/2009/238196.

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Real option analysis offers interesting insights on the value of assets and on the profitability of investments, which has made real options a growing field of academic research and practical application. Real option valuation is, however, often found to be difficult to understand and to implement due to the quite complex mathematics involved. Recent advances in modeling and analysis methods have made real option valuation easier to understand and to implement. This paper presents a new method (fuzzy pay-off method) for real option valuation using fuzzy numbers that is based on findings from e

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16

Del Viva, Luca, Eero Kasanen, and Lenos Trigeorgis. "Real Options, Idiosyncratic Skewness, and Diversification." Journal of Financial and Quantitative Analysis 52, no. 1 (2017): 215–41. http://dx.doi.org/10.1017/s0022109016000703.

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We show how firm-level real options lead to idiosyncratic skewness in stock returns. We then document empirically that growth option variables are positive and significant determinants of idiosyncratic skewness. The real option impact on skewness is more significant in firms with lottery-type features, small size, high volatility, distressed, low return on assets, and low book-to-market ratio. We also find that expectation on idiosyncratic skewness is associated with lower Sharpe ratios. This suggests investors are willing to sacrifice mean-variance portfolio efficiency for greater skewness de

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17

Wang, Chao, Wei Liang, and Shou Qing Wang. "Real Option in Urban Rapid Rail Transit PPP Project." Applied Mechanics and Materials 505-506 (January 2014): 437–42. http://dx.doi.org/10.4028/www.scientific.net/amm.505-506.437.

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To address a real issue in Beijing Urban Rail PPP project, an Excel model is built to solve the decision making problem of car park scale using real option theory. The model calculates the expected NPV of different options of building scale with real option embedded, avoiding the trouble of option pricing. The results show that real option can significantly optimize the decision making process of PPP projects. Especially when dealing with the problems raised by uncertainty in the process of negotiation, decision making and execution of a PPP project, real option can be more useful as it not on

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18

Chu, Yongqiang, and Tien Sing. "International Real Estate Review." International Real Estate Review 24, no. 1 (2021): 1–17. http://dx.doi.org/10.53383/100314.

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Developers make decisions around timing and intensity simultaneously when exercising a development option. Built on the early real options models, we allow the demand shock and the cost functions to be dependent on the intensity of real estate development. Based on a set of input parameters, the numerical results show that demand uncertainty delays development activities, and the rental elasticity to density change has an inverse effect on the deferment option values. In a market where the intensity impact on rental income is small, development activities are likely to be curtailed when market

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Ternova, Yaroslavna O. "ANALYSIS OF THE SUCCESS OF ORGANIZATIONAL CHANGES BASED ON THE RESULTS OF REAL OPTIONS THEORY." EKONOMIKA I UPRAVLENIE: PROBLEMY, RESHENIYA 11/11, no. 152 (2024): 21–30. https://doi.org/10.36871/ek.up.p.r.2024.11.11.003.

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The purpose of the work is to substantiate the application of the theory of real options to assess the success of organizational changes. An analogy is drawn between financial and real options, where: a) a project acts as a subject asset within the framework of organizational changes; b) an investment in a real option act as an option premium; c) as a strike– the standard for the target level of return on the level of net return on invested capital (ROI). Since the expected results from the use of the option are vague, there is a risk that the expected effect of the implementation of the optio

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20

Wang, Qian, Keith W. Hipel, and D. Marc Kilgour. "Fuzzy Real Options in Brownfield Redevelopment Evaluation." Journal of Applied Mathematics and Decision Sciences 2009 (June 24, 2009): 1–16. http://dx.doi.org/10.1155/2009/817137.

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Real options modeling, which extends the ability of option pricing models to evaluate real assets, can be used to evaluate risky projects because of its capacity to handle uncertainties. This research utilizes possibility theory to represent private risks of a project, which are not reflected in the market and hence are not fully evaluated by standard option pricing models. Using a transformation method, these private risks can be represented as fuzzy variables and then priced with a fuzzy real options model. This principle is demonstrated by valuing a brownfield redevelopment project using a

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21

Fernandes, Rui, Joaquim Gouveia, and Carlos Pinho. "Overstock – A Real Option Approach." Journal of Operations and Supply Chain Management 3, no. 2 (2010): 98. http://dx.doi.org/10.12660/joscmv3n2p98-107.

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In the last decades, firms have been facing a new challenge, considering the increasing uncertainty of the markets and the pressure to achieve better levels of performance, within the stake-holders expectations. Three main problems have been emerging in dealing with management performance: the increasing pressure to reduce working capital, the growing variety of products and the fulfillment of a demanding service level. Most of the popular indicators have been developed based on a controlled environment. A new indicator is now proposed, based on the uncertainty of the demand, the flexibility o

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22

Chow, Joseph Y. J., and Amelia C. Regan. "Network-based real option models." Transportation Research Part B: Methodological 45, no. 4 (2011): 682–95. http://dx.doi.org/10.1016/j.trb.2010.11.005.

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23

Mardones, JoséLuis. "Option valuation of real assets." Resources Policy 19, no. 1 (1993): 51–65. http://dx.doi.org/10.1016/0301-4207(93)90052-o.

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24

Azevedo, Alcino, and Dean Paxson. "Developing real option game models." European Journal of Operational Research 237, no. 3 (2014): 909–20. http://dx.doi.org/10.1016/j.ejor.2014.02.002.

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25

Wonder, Nicholas. "Contracting on real option payoffs." Journal of Economics and Business 58, no. 1 (2006): 20–35. http://dx.doi.org/10.1016/j.jeconbus.2005.06.004.

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26

Гераськина and A. Geraskina. "The Method of Real Options in the Evaluation of Strategic and Investment Decisions." Economics 5, no. 3 (2017): 41–45. http://dx.doi.org/10.12737/article_59393a6b428b54.77069649.

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The method of real options is one of the new approaches to estimate investment projects’ cost and it is an important addition to discounted cash flow method. Real option significantly increases the efficiency of the project due to the possibility of decision-making during its implementation. This aspect is especially important in unstable environmental conditions. The main differences between the financial and real options are presented. The differences of valuation of investment projects by the real options method and net present value are examined. The article presents the types of real opti

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27

Doval, Hernán C. "Is Preventing Heart Failure a Real Option? Is Preventing Heart Failure a Real Option?" Revista Argentina de Cardiologia 87, no. 6 (2019): 489–93. http://dx.doi.org/10.7775/rac.v87.i6.16645.

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28

Vimpari, Jussi, and Seppo Junnila. "Valuing green building certificates as real options." Journal of European Real Estate Research 7, no. 2 (2014): 181–98. http://dx.doi.org/10.1108/jerer-06-2013-0012.

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Purpose – The purpose of this study is first to evaluate whether real options analysis (ROA) is suitable for valuing green building certificates, and second to calculate the real option value of a green certificate in a typical office building setting. Green buildings are demonstrated as one of the most profitable climate mitigation actions. However, no consensus exists among industry professionals about how green buildings and specifically green building certificates should be valued. Design/methodology/approach – The research design of the study involves a theoretical part and an empirical p

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Xue, Yong Gang, and Ming Li Zhang. "Valuing Research Investment Projects Based on Discrete Time Model: A Real Options Approach." Advanced Materials Research 926-930 (May 2014): 4073–76. http://dx.doi.org/10.4028/www.scientific.net/amr.926-930.4073.

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The methodology is proposed to value a project based on real options model firstly. Then the BOPM is used to value a project and the empirical results are compared with the results which are based on NPV approach. The results favor the application of the real option theory and show that the option value have important role on investment decision. The results show that the real option approach is more rational than the traditional NPV approach in valuing project because the uncertainty is considered in real option approach. The uncertainty with respect to project return has a substantial effect

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LIU, YU-HONG. "VALUATION OF COMPOUND OPTION WHEN THE UNDERLYING ASSET IS NON-TRADABLE." International Journal of Theoretical and Applied Finance 13, no. 03 (2010): 441–58. http://dx.doi.org/10.1142/s021902491000584x.

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After Geske (1979), compound options — options on options — have been employed in many fields in which real options are applied. The formula for a compound option is convenient to use in real project investment, but it has one drawback — the assets that underlie the compound options are usually non-tradable. This article addresses this issue and proposes two new compound option pricing formulae to overcome this drawback.

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Adner, Ron, and Daniel A. Levinthal. "What IsNotA Real Option: Considering Boundaries for the Application of Real Options to Business Strategy." Academy of Management Review 29, no. 1 (2004): 74–85. http://dx.doi.org/10.5465/amr.2004.11851715.

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32

Cottrell, Tom, and Gordon Sick. "Real Options and Follower Strategies: The loss of real option value to first-mover advantage." Engineering Economist 47, no. 3 (2002): 232–63. http://dx.doi.org/10.1080/00137910208965035.

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33

Krishnaswamy, C. R., and Rathin S. Rathinasamy. "Offshore Outsourcing Contracts: Real Options Analysis Using Trinomial Option Pricing Model." GLOBAL BUSINESS & FINANCE REVIEW 20, no. 1 (2015): 15–24. http://dx.doi.org/10.17549/gbfr.2015.20.1.15.

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34

Grenadier, Steven R. "OPTION EXERCISE GAMES: THE INTERSECTION OF REAL OPTIONS AND GAME THEORY." Journal of Applied Corporate Finance 13, no. 2 (2000): 99–107. http://dx.doi.org/10.1111/j.1745-6622.2000.tb00057.x.

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35

Foo Sing, Tien. "A Real Option Approach to Pricing Embedded Options in Retail Leases." Pacific Rim Property Research Journal 18, no. 3 (2012): 197–211. http://dx.doi.org/10.1080/14445921.2012.11104359.

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36

Scherpereel, Christopher M. "The option-creating institution: a real options perspective on economic organization." Strategic Management Journal 29, no. 5 (2008): 455–70. http://dx.doi.org/10.1002/smj.671.

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37

Wu, Yiping, Jianjun Wang, Qing Wang, et al. "Portfolio Real Option Based on Trigeminal Tree Model in Sustainable Utilization of Exploration Asset." Wireless Communications and Mobile Computing 2022 (April 27, 2022): 1–11. http://dx.doi.org/10.1155/2022/4662460.

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Uncertainty of crude oil market causes the value of oil and gas exploration assets to fluctuate upward, remain unchanged, and fluctuate downward. So exploration project investment is usually chartered by multistages. This brings many challenges to investment decisions regarding the sustainable utilization of exploration assets. To avoid the investment risk of exploration projects, a portfolio option method based on the trigeminal tree model was proposed. By analysing the real options involved in oil and gas exploration assets, the investment process is divided into European options and America

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Da, Wu, and Wan Li Xing. "Study on the Application of Real Options in Coal Resources Investment." Advanced Materials Research 978 (June 2014): 265–71. http://dx.doi.org/10.4028/www.scientific.net/amr.978.265.

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This paper uses the real options approach to conduct research on the coal resources development investment decision by literature studies, the combination of theoretical research and practical research. It has carried on the systematic overall retrospect to the domestic and international research results about real option. It introduces and analyzes the real option theory on the basis of analyzing and appraising to the traditional investment methods systematically in detail. This paper has studied the value of the investment project again with the real option theory. It sums up the application

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Cioaca, Catalin, and Mircea Boşcoianu. "Applications of Real Options Analysis in Aviation Security Investments." Applied Mechanics and Materials 436 (October 2013): 32–39. http://dx.doi.org/10.4028/www.scientific.net/amm.436.32.

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The interest upon real options method amplified in the last decade due to the higher level of uncertainty faced by some organizations (from the private and also the public sector) when the decision to make a strategic investment is required (in a competitive environment) or it is a external requirement of the organizational environment (ensuring security standards). The process of assessment of the option is developed by evaluating the potential benefits associated with the three possible scenarios under expansion, contract and wait options. The value of the real option is the result of the fu

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Mintah, Kwabena, David Higgins, and Judith Callanan. "A real option approach for the valuation of switching output flexibility in residential property investment." Journal of Financial Management of Property and Construction 23, no. 2 (2018): 133–51. http://dx.doi.org/10.1108/jfmpc-05-2017-0017.

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Purpose Uncertainties in residential property investment performance require that real estate assets are designed in a flexible manner to respond to impacts of market dynamics. Though estimating the cost of flexibility is straightforward, assessing the economic value of flexibility is not. The purpose of this study is to explore the potential practical application of real option analysis to determine the economic value of a switching output flexibility embedded in a residential property investment in Australia. The study involves the exploration of an optimal strategy for investment in a resid

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Šoltés, Michal, and Monika Harčariková. "Gold price risk management through Nova 3 option strategy created by barrier options." Investment Management and Financial Innovations 13, no. 1 (2016): 49–0. http://dx.doi.org/10.21511/imfi.13(1).2016.04.

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The paper is focused on selected aspects of the hedging using of Nova 3 option strategy created by barrier options, which are appropriate tools widely used for risk management of high risk underlying assets. Financial risk management using option strategies is an effective solution for limiting the loss from underlying asset’s price development. The Nova 3 option strategy is suitable for hedging against increase in price of the underlying asset in case of its purchase in future. In our approach, European up and knock-in call options together with standard put and barrier put options are used f

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Kulcsár, Edina. "Managing risk using real options in company’s valuation." Acta Agraria Debreceniensis, no. 58 (April 8, 2014): 125–32. http://dx.doi.org/10.34101/actaagrar/58/1984.

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The valuation of company is very important because provides information about the current value/situation of company, and through this, provide the opportunity of choosing the best company’s growth alternatives. The future strategic decisions are characterized by lack of knowledge, information, so all measures of company’s growth are closely linked with uncertainty and risk. The company’s valuation process is also related with uncertainty and risk. The risk may result both from the assessed assets and the technique used. In literature, we could find three approaches for risk management: capita

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Cucchiella, Federica, and Massimo Gastaldi. "Real Option Approach for the Management of a New Product Development in the Pharmaceutical Sector." Advanced Materials Research 746 (August 2013): 551–56. http://dx.doi.org/10.4028/www.scientific.net/amr.746.551.

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The main scope of this paper is to perform a real options analysis that is often recommended as an emerging valuation technique for high-risk investment projects. The pharmaceutical sector is a sector where the real option can be positively applied to incorporate the flexibility and the risks of the new product development. In this paper the real option theory is applied to a pharmaceutical company that is developing a particular new product. Due to the uncertain nature of the new product development, it can be strategic to evaluate the real option benefits for the investment under analysis.

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Chen, Yanmin, Yixuan Li, and Yixuan Li. "Investigating the difference of option’s real values between Lookback option and European option based on price models." Highlights in Business, Economics and Management 4 (December 12, 2022): 21–30. http://dx.doi.org/10.54097/hbem.v4i.3360.

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The concept of pricing model is crucial for global financial markets today. Millions of investors tend to seek options to effectively maximize their returns. The lookback option is based on various exotic options in response to this trend. This paper chooses Amazon’s stock as our data to analyze and then simulate its future stock price 1000 times. By calculating the minimum and maximum value of stocks during a given period, we know the returns gained by using the lookback option and then compare the payoffs with those of the European option. We then conclude that the lookback option could lowe

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45

Kawaguchi, Yuichiro, and Kazuhiro Tsubokawa. "The pricing of real options in discrete time models." Journal of Property Investment & Finance 19, no. 1 (2001): 9–34. http://dx.doi.org/10.1108/14635780110365334.

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This paper proposes a discrete time real options model with time‐dependent and serial correlated return process for a real estate development problem with waiting options. Based on a Martingale condition, the paper claims to be able to relax many unrealistic assumptions made in the typical real option pricing methodology. Our real option model is a new one without assuming the return process as “Ito Process”, specifically, without assuming a geometric Brownian motion. We apply the model to the condominium market in Tokyo metropolitan area in the period 1971‐1997 and estimate the value of waiti

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Banerjee, Ashok. "Real Option Valuation of a Pharmaceutical Company." Vikalpa: The Journal for Decision Makers 28, no. 2 (2003): 61–73. http://dx.doi.org/10.1177/0256090920030205.

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Valuing a research-driven firm is a challenging task. The static discounted cash flow (DCF) model fails to capture the value of R&D options. Pharmaceutical companies are, by their very nature, dependent on research products. These companies face an uncertain business environment. Roughly, one out of 10,000 explored chemicals becomes a prescription drug and only 30 per cent of drugs succeed in recovering their costs. Since the future of current R&D investments is uncertain, the traditional cash flow method may return a negative value of the future growth plan. Various studies have shown

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47

Boyadzhiev, Radostin. "How to use real options in project evaluation." Science, Engineering and Education 8, no. 1 (2023): 114–19. http://dx.doi.org/10.59957/see.v8.i1.2023.14.

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An option is a financial instrument that gives the opportunity, but not the obligation, to sell or buy a given financial asset, under predetermined conditions. When used for real (tangible) assets, then we are talking about a real option. The present paper will examine the advantages and disadvantages of using real options in the evaluation of investment projects. The analysis will be presented as a com- parison with traditional discounted cash flow methods. Net present valu (NPV) and other discounted cash flow methods are based on the presumption that expectations for the period of the invest

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Ford, David N., and Diane M. Lander. "Real option perceptions among project managers." Risk Management 13, no. 3 (2011): 122–46. http://dx.doi.org/10.1057/rm.2011.8.

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Dong, Jing-Hui, and Yoshio Iihara. "Investment Criterion in Real Option Models." Journal of Real Options and Strategy 4, no. 2 (2011): 159–67. http://dx.doi.org/10.12949/realopn.4.159.

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Haahtela, Tero. "Simulation methods in real option valuation." International Journal of Operational Research 25, no. 4 (2016): 487. http://dx.doi.org/10.1504/ijor.2016.075294.

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