The entry/exit real options model for Internet securities trading business

This study presents a decision model using the real options approach (ROA) for evaluating the entry or exit of the Internet securities trading business in the face of both technological and economic uncertainties. Furthermore, this study considers the effect of uncertainty and the added profits after establishing an electronic securities trading system (ESTS) to determine the optimal threshold for implementing the entry/exit project. Additionally, the differences between the real options approach and the net present value method are discussed. Numerical analysis of the Taiwan stock market using the real options approach is more consistent with the observed entry/exit data than similar analysis using the net present value method for supporting the entry/exit decisions in the face of uncertainty.