Overview

The Real Options Super Lattice Software (SLS) comprises several modules, including the Single-Asset and Single-Phased SLS, Multiple-Asset or Multiple-Phased SLS, Multinomial Lattice Solver, SLS Excel Solution, and SLS Functions (Figure A1-1). These modules are highly powerful and customizable binomial and multinomial lattice solvers and can be used to solve many types of options (including the three main families of options: real options, which deals with physical and intangible assets; financial options, which deals with financial assets and the investments of such assets; and employee stock options, which deals with financial assets provided to employees within a corporation). The power of this software is the ability to create and financially engineer your own customized options, as seen throughout this book. Specifically, this software can be used to solve exotic options that cannot be solved using closed-form models or equations. For instance, exotic instruments such as fairway options, basket of exotics, chooser options, options with specific blackout periods and vesting periods, and many other combinations and a la carte options that a bank or investment company can engineer, can be readily solved using this software. This Appendix is not meant as a detailed training for these exotic options; rather, it is designed as a getting started primer for using the SLS software. Please refer to the rest of the book for details on applying this software in solving exotic options, as well as the Basel II Modeling Toolkit for running and...