Real options represent what is possible beyond the current business operations.
Investors can ignore real options, try to find real option value for free, or consciously seek out companies that have abundant real option value. What a difference a year makes. The concept of real options was popularized by Michael J. Mauboussin, the chief U.S. investment strategist for Credit Suisse First Boston and an adjunct professor of finance at the Columbia School of Business. No matter how rigorous the analysis, the best one can come up with is a possible range of values and a probability. That's because putting a value on a business requires projecting future cash flows for the life of the business, and nobody can predict the future with perfect accuracy.