The actual options can be classified according to two levels of interpretation: an overall strategic classification (distinguishing between optimization and growth) and a detailed operational taxonomy (describing the nature of flexibility).

Here are the different categories of real options identified:

1. The Strategic Distinction: PORO vs GORO

The authors propose a typology grouping the options into two main families according to their strategic purpose:

• Process Optimization Real Options (PORO) These relate to existing markets and products. The objective is to optimize the allocation of resources in the face of uncertainty of volumes, prices or costs. They make it possible to adjust the industrial tool to the reality of the market (e.g. manufacturing flexibility, temporary closure of a site).
• Growth Opportunities Real Options (GORO): These allow the company to develop in the long term, or even to reinvent itself. They are often based on intangible investments (R&D, patents, human capital, infrastructure) that open doors to new markets or products that were not yet known at the time of the initial investment.

2. The operational taxonomy

In detail, the real options are available in several specific types, making it possible to manage the reversibility and flexibility of investments:

• Option to Wait: This is the ability to postpone an investment until market conditions (price, demand) are more favorable or uncertainty is removed. This is typically the case in real estate development or the exploitation of natural resources.
• Time to Build Investment: Instead of installing all capacity immediately, the company invests sequentially. It installs a reduced initial capacity and only increases it if the market responds favourably, thus avoiding the costs of unnecessary overcapacity.
• Dynamic Capacity Management (Opening/Closing): Particularly relevant in the mining industry, this option allows you to slow down, temporarily interrupt (cocoon) or restart production depending on the volatility of raw material prices.
• Input/Output Flexibility: This is the technical ability to modify inputs (e.g. changing energy sources according to cost) or outputs (e.g. producing different car models on the same assembly line) to adapt to costs and demand.
• The Abandonment Option: This is the right to stop a project mid-way and to sell the assets (tangible or intangible) to recover residual value if economic viability is no longer assured. This helps to limit losses (downside risk hedging).
• The Growth Option: This represents the ability to significantly increase volumes or expand the scope of activity (new markets). Underleveraging is cited as a form of financial growth option, as it preserves a “reserve of power” to seize strategic acquisition opportunities.

3. The distinction between property and R&D

Finally, two nuances are important for valorization:

• Proprietary vs. Shared Option: An option can be exclusive to the company (e.g. a patent, an exclusive license) or shared with competitors (e.g. a market opportunity open to all). The value and the decision to exercise depend heavily on this exclusivity.
• The case of R&D: An R&D project is not an option in itself, but a process of building an option. Each step (project review) allows you to buy information to decide whether to continue or stop, gradually building the final right to launch a new product.