Real options analysis provides a number of insightful lessons and implications:
1) Uncertainty and flexibility are two key determinants of the value of an asset of a firm.
The traditional valuation paradigm based on cash flows from expected plans under the implicit assumptions of passive management has proven inadequate in dynamic settings
The role of the uncertainty in the presence of management flexibility is not penalising
Greater variability of potential outcomes around the expected result may be beneficial in the presence of options and an asymmetric managerial position
2) Managerial flexibility to revise future decisions when there are deviations from the expected plans introduces beneficial asymetry in the distribution of project value returns by enabling value creation opportunities to be exploited fully, while limiting downside losses
Managerial flexibility or real option value may be higher for firms or industries facing higher uncertainty
3) Higher uncertainty tends to increase the value of the option to defer
The flexibility to delay or wait-and-see enables acquiring more and better information and making a more informed future decision
4) Multi-stage opportunities may have significant option value that may justify making strategic investments despite having negative NPV
