We develop a model for valuing revenue streams from innovations. The stochastic properties of revenue from innovations create a more difficult environment in which to value options than when the underlying is a security. There is no initial revenue, and cumulative revenue cannot decrease....

In recent years financial engineers have created instruments that facilitate the efficient transfer of the risk associated with certain forms of entertainment revenues. This paper focuses on one particular instrument, options on streams of movie revenues. These options enable film distributors...