Abstract: This paper set forth the definitions of option and real options in the first place, then analyzed the current state of emergers and acquisitions in iron and steel enterprises in China and the principles of assessing the values of mergers and acquisitions as well as the deficiencies, thus made further analysis of option in mergers and acquisitions of the iron and steel enterprises, introduced the nature of option in mergers and acquisitions, studied real options that implied in mergers and acquisitions, and finally led to the methods of real options in assessing the values of mergers and acquisitions in iron and steel enterprises, then analyzed the applications of this theory in the value assessment of mergers and acquisitions in iron and steel enterprises in depth, and established a general framework of value assessment in iron and steel enterprises.