Guessing is not a strategy: How to build decision velocity with AI and real-time data
June 10, 2026 | Live Webinar
Know Your Options
Project valuation is a fundamental component of portfolio management, but it is filled with uncertainty. As projects unfold and realities change, yesterday's best estimate can become today's big headache. Real options analysis can help. How does it work and when should it be applied?
Thales, a famous Sophist philosopher circa 600 B.C., gazed into the star-studded stellar sky one evening and predicted an outstanding olive harvest the next season. For a small up front fee, he bought the right from the owners of the olive presses to rent them for the usual rate during the harvest season. If the harvest was to turn out meager, the need for the presses would be little and Thales would not rent the presses, losing the up front fee. But if the harvest were bountiful, he would rent the presses and make a fortune. Sure enough, it was an outstanding harvest, and Thales rented the much-demanded presses at a significant margin. He was, however, apparently more interested in proving the wisdom of Sophists than in making money, as Aristotle tells this story in Politics.
This is one of the earliest examples of a real options contract, wherein Thales bought an option — a right, but not an obligation — to rent the presses, the underlying risky asset. This is called a real option, not a financial option, because the underlying asset is a real asset, not a financial security.…
Please log in or sign up below to read the rest of the article.
ADVERTISEMENTS