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Value of TC options - Shipstrategy

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Value of TC options

Strategy in shipping

Value of options in time chartering

There are few companies today that actually calculates the cost or price of options in time chartering. E.g. An owning company of MR tankers may fix one of their vessels to Shell for 23,000 USD/day first year with Shell's option for a second year at 25,000 USD/day.
What is actually the value of this option for Shell ?

It is generally known that in the shipping markets there are ways to take options on freight rates, hedging with freight options.

In this context we focus on the use of Real options analysis
The flexibility to exercise or not is the essential characteristic that distinguishes options from passively held securities.

In Shipstrategy and our Shipinvest4004 we have introduced a model for one period analysis of the option value of fixing vessels on tc.

 
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