We ¯nd a closed-form formula for valuing a time-switch option where its underlying asset is a®ected
by stochastically changing market environments, and apply it to the valuation of other qualitative
options such as corridor options and options in foreign exchange markets. The stochastic market
environments are modeled as a Markov regime-switching process. This analytic formula provides us a
rapid and accurate valuation scheme for valuing qualitative options with stochastic volatility.