The concept of a real option is crucial to the success of a business as the ability to choose the right business opportunity bears a significant effect on the company’s profitability and growth. A real option allows the management team to analyze and evaluate business opportunities and choose the right one. Your choices tend to among option to expand, option to abandon, option to wait, option to contract or option to switch. While option-pricing models are indeed a superior valuation tool—the usual use of the theory—we believe that real options can also provide a systematic framework serving as a strategic tool and that the real power of real options lies in this strategic application.