Option in House Lease Contracts

Existence of high uncertainty in economic fields and consequently need to efficient tools for covering risk resulted from these uncertainties is evident for everybody. One of the economical fields of our country which necessitate these tools is real estate and particularly leasing. Traditional contracts which are currently used are not satisfying the current needs and conditions any more. There are many tools which can develop them according to the landlords and tenants’ needs. At first, the expressions for options are described in this research. Then, the option and its role in land leasing contracts is discussed. Finally, the approaches for valuation of option of leasing contract are presented which is confirmed in Iran in addition to the validity of the model.