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From the Editor

Mikael Collan
Lappeenranta University of Technology, Business School, PO BOX 20, 53850 Lappeenranta, Finland mikael.collan@lut.fi

Welcome to the first issue of the Journal of Real Options! It has already been a long time since research on real options merits a dedicated journal and now the time has come. In the modern world of academia it is challenging to start a new journal. I have still decided to go against the grain and have set up the Journal of Real Options to be a channel of academic publication for research on real options. These efforts are backed up by the board that composes of many international top names in real options research today. In this inaugural issue we have three academic research papers: In the first paper Stein-Erik Fleten, Vidar Gunnerud, ystein Dahl Hem, and Alexander Svendsen examine the valuation of real options related to offshore petroleum production. The problem is to look at the analysis of investing in adding a smaller tie-in oil field into an already existing larger field. In the second paper Luiz E. Brando and James S. Dyer present a straightforward way of implementing real option valuation using standard decision tree tools, while taking the correlation between private and market risks into consideration. Considering the correlated risk brings an additional level of complexity into the modeling. The paper demonstrates how the correlation can be addressed in a practical way. In the third paper Tero Haahtela presents a volatility estimation method for simulation based real option valuation under changing volatility that can also handle negative asset price. The paper discusses how uncertainty decreases as the future is revealed and shows how the method presented is a good example of rolling valuation with respect to new more accurate information. It is my sincere hope that this journal will become a place where researchers on real options will be able to share their research results and their thoughts about the application and theoretical issues of real options. And remember, the Journal of Real Options welcomes also short case reports, discussion papers, method notes, state-ofthe-art articles, and book reviews in addition to high quality academic research articles.

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