Flexibility exist in both financial and real options. In each instance, an option holder can decide whether to make the investment and realize the payoff, and if so when to invest - important since the payoff will be optimal at a particular moment. These are what may be termed "reactive" flexibilities - flexibilities an option holder exploits to respond to environmental conditions and maximizes the payoff. Larger payoff occur from the proactive flexibility to increase the value of an option, once acquired.
According to Copeland, six variables drive the value of a real option; and exploiting flexibility becomes simply a question of appropriately influencing one or more of those variables.
Here are the 6 variables that can help leverage options flexibility:
Increase in the present value of cash flows from Investment
An increase in the PV of the project will increase the NPV and therefore the ROA will also increase. This is achieved by increasing revenues, either by raising the price or producing and selling more of the commodity in question or by generating sequential business opportunities.
Reduce the exercise price/investment cost
This is the amount invested to exercise the option if you are "buying" the asset , or the amount of money received if you are "selling" it. A higher investment cost will reduce NPV and therefore reduce ROA.
Increase the time to expire
As the time to expiration increases, so does the value of an option. The raise in option value is because by extending the opportunity's duration, the total uncertainty increases. A longer time to expiration will allow you to learn more about the uncertainty and therefore it will increase ROA.
Increase the risk free interest rate
As risk free interest rates go up, so too does the value of an option. An increase in the risk free rate will increase the ROA since it will increase the time value of money advantage in deferring the investment cost. It is important to note that risk free rate cannot be influenced by any player but its effect can be leveraged.
Reduce the value lost by waiting to exercise
In financial options, this is the cost of waiting until after payment of a dividend (which lowers the stock value, and therefore the option payoff). In a real business situation, the cost of waiting could be high if an entrant were to seize the initiative. Increasing cash flows lost to competitors will clearly decrease the ROA.
Volatility about the present value
The value of an option increases with the riskiness of the underlying asset because the payoffs of a call option depend on the value of the underlying asset exceeding its exercise price and the probability of this increases with the uncertainty of the PV (Present Value).