Options (financial and real options)
Options convert risk into value. They are a mechanism to profit from or get protection for uncertain or risk events.
A financial option is "the right, but not obligation, to buy or sell an underlying security." A real option is analogous right with respect to business decisions.
Since options convert risk into value, they have wide-ranging applications, to business strategy and operations, project decisions, and many other activities.
References
Natenberg, Sheldon. Option Volatility & Pricing: Advanced Trading Strategies and Techniques. McGraw-Hill; 1994. 470 p. ISBN: 155738486X.
888Options.com [Web site]. The Options Industry Council; c2007. http://www.888options.com/
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