SWEEET – Module 4

Introduction

In this module, we will discuss the valuation of an option. In our example, adding a generator to the network is the option. The first section of this module is an excel file consisting of all inputs of an option valuation, intermediate data needed to evaluate the option, and finally, the option value evaluated from the option value tree. Section 2 is a guide to help the users to understand the content of the excel file in section 1. Lastly, in section 3, we have added a “Try yourself” version of the previous excel file, where users can modify the inputs and evaluate their own options.

 

Section 1. Option valuation

 

Section 2. A guide on option valuation

 

Section 3. Option valuation – Try yourself

 

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