  Continuous time models in the theory of real options give explicit formulas
for optimal exercise strategies when options are simple and the price of an
underlying asset follows a geometric Brownian motion. This paper suggests a
general, computationally simple approach to real options in discrete time.
Explicit formulas are derived even for embedded options. Discrete time
processes reflect the scarcity of observations in the data, and may account for
fat tails and skewness of probability distributions of commodity prices. The
method of the paper is based on the use of the expected present value
operators.
