When and where can one buy primary growth options for free?

I used to teach an intro corporate finance course, and one of the important concepts for valuing a company is that its current value equals to the value of its assets-in-place plus the value of growth options.

The value of assets-in-place can be estimated from balance sheets and the streams of cash flows that these assets are expected to generate over the foreseeable years.

The value of growth options can be extremely high for technology companies that can break into new areas of growth. That's what gives tech companies very high earnings multiples. You normally cannot buy these growth options for free. That would be considered a financial free lunch.

Yet, if you look at AAPL today, you can't help but wondering why investors are offering you to take away the growth options for better than free.

Apple, the primary driver of mobile revolution and the maker of a series of iconic products iPod, iPhone & iPad, is now valued at an earnings multiple below 10! (Its share price came below $420 yesterday.) You can argue whether or not analysts' earning estimates are off, or if iPhone's profit margin is coming down due to the fierce competition from Google and Samsung, but you cannot be serious if you think Apple is just going to stand still, with or without Steve Jobs!

The company is doing over $120 billions a year in revenue, and making $40-50 billions in profit. More importantly, consumers love their products. I can't take my iPad away from my 4 and 8 years old kids! And they're having access to iMac and iPad in their schools on the daily basis. I have an Android phone, and my wife has an iPhone. I can tell you that I'd like to switch to iPhone next time.

The big picture is this and it's the most important for Apple investors: the world is converging to digital. We're going to be connected, more than ever, via these elegant devices wherever and whenever. These devices are not only indispensable,  they must also be friendly and a pleasure to use.

Apple is at the very center of this mega-trend. Best positioned, and has the most cash and best brain to push the mobile envelope.

If you like free options, buy AAPL.