1. Option Theory & Coal-fired Power Generation Donald C Rorke (Fall 2002)

2. What considerations can ‘Option Theory’ be applied to with this type of business?  Alternative forms of power generation.  Alternative forms of financing.  Site selection.   Coal prices   Exchange rate hedging.   Market rates for exported power.   Etc.

3. Put Options.  Alternative forms of power generation.  Alternative forms of financing  Site selection.  Why?

4. Call Options.  Coal prices.  Market rates for exported power.  Exchange rates.  Why?

5. Volatility of these Options.  Seasonality of market.  Public perceptions.  Transportation.  Labour bargaining units.

6. Questions?