The real options approach is most appropriate when there is significant uncertainty concerning the outcomes of an innovation project and/or when a firm’s investment in its own capabilities is an important consideration. One could also argue that a real options approach is most appropriate when the investment is most similar to a call option (i.e. small initial investment and not dependent on the investors behavior). Finally a real options approach is best used when evaluating advanced R&D and breakthrough projects. Real options may be more complex than is necessary when it comes to evaluating platform and derivative projects