The management at Socrates Motors considered the option to abandon when building their new manufacturing plant. The design of the plant allows it to be easily converted to manufacture other types of large machinery. If their new line of cars is poorly received, their plant should be easy to sell to another manufacturing company. In this example, the price at which they expect to sell the plant if things go poorly resembles

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The price at which they expect to sell the plant if things go poorly resembles the strike price of a put option on the plant. This is because the management is considering the option to abandon, which means they have the right to sell the plant at a certain price (strike price) if the new line of cars is poorly received. Therefore, the price at which they expect to sell the plant is similar to the strike price of a put option on the plant.

The Management at Socrates Motors Considered the Option to Abandon