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Real Option Pricing for Real Estate IT Project

Real Option Pricing for Real Estate IT Project. Zach Veenstra. Real Options Explained. In finance, a real option is defined as the “ right to obtain the benefits of owning some real world asset without the obligation to exercise that right.” Unlimited benefit Limited downside

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Real Option Pricing for Real Estate IT Project

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  1. Real Option Pricing for Real Estate IT Project Zach Veenstra

  2. Real Options Explained • In finance, a real option is defined as the “right to obtain the benefits of owning some real world asset without the obligation to exercise that right.” • Unlimited benefit • Limited downside • Can be applied to any company project, including IT

  3. Long Call Option

  4. For the Real Estate IT Project? • Stage-Growth Option – A stage-growth option is embedded in each stage of the implementation of the project, and it gives us the financial feasibility of future growth with the next stage. • Stage-Abandon Option – A stage-abandon option is also embedded in each stage of the implementation, but contrary to growth, it indicates the financial feasibility of the future to be bleak, and therefore signifies the next stage be shut down and new ideas be brought up.

  5. Implementation

  6. Thank You!

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