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Abandonment Option
(redirected from Abandonment Options)

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Abandonment option
The option of terminating an investment earlier than originally planned.

Abandonment Option
A clause in some contracts allowing one party or the other to terminate the contract before completion. The abandonment option adds value to a contract that can be traded because it allows both parties a great deal of flexibility in case the contract proves unprofitable. However, the clause is most common in contracts between financial advisers and their clients.


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We develop a real option valuation framework to capture investment and abandonment options in the research-intensive biotechnology industry.
This finding is significant because it demonstrates, as has already been illustrated, that there are circumstances in which addition of learning and abandonment options can actually reduce a lawsuit's settlement value below its divisibility value.
 
 
 
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