Practical Study On Real Options In Technique Trade

The prosperity of technique trade market since 2000 makes the pricing more and more outstanding. The traditional analytical method, which is represented by the hardcore NPV, assumes the reversibility of investment, and can not manage to evaluate the uncertainty in the technique trade from a dynamic point of view. So the traditional way has disadvantages in nature. The new method, real option, can overcome the deficiency. However, although there are a lot of researches theoretically and practically in our country, it is not widely used because the pricing models are too complex to use or they are not accepted and understood by the public. There are no real option pricing models which are adapted to technique trade.After analyzing the research results from abroad and inland both in theory and in practice, research concentrates on the real option pricing models by combining the study on the process, real option characteristics and cash flow of technique with case. This study gives the specific method and process of adapting real option into analyzing technique trade by investigation on the integration of theory and practice. Also, two methods, WADR and Binominal Option Pricing Model (BOPM), are introduced into the field of technique trade according to different real option characteristics. The practical way of using these two methods are also described in detail along with the discussion on the best practice time and influence factors.And finally a real case is analyzed by both NPV and WADR method from the aspects of the project itself and investor. A study about the influence of different cash flow on the value of real option is also carried out.