when are real options most appropriate 
real options are most appropriate when the economic environment and market conditions relating to a particular project are highly volatile yet flexible stable or rigid environments will not benefit much from real options value rov analysis and should use more traditional corporate finance techniques instead the bottom linea real option gives management of a company the right but not the obligation to undertake certain business opportunities or investments it is called a real option because it usually references projects involving a tangible asset such as machinery land and buildings as well as inventory instead of a financial instrument 