# Annual Stock Option Grants Calculator

## Annual Stock Option Grants Calculator

If you want to know the value of a single option grant, click here .

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What are stock options?
Many companies offer stock options, which are shares of the business, to their executive employees as a form of compensation. Annual option grants are typically used to give workers incentive for their performance. By giving employees stock options, part or all of their compensation becomes directly tied to the success of the company. This can ensure employee initiative to propel the business forward.
If you are receiving option grants they can present a unique investment opportunity. You will be able to buy or sell the shares granted to you for a set price, regardless of how the stock is performing in the market. That means with the right prediction of a company’s performance, you could really maximize your earnings. Stocks can be complicated, so you will need a process-driven strategy when evaluating your options to make the best financial decision.
How can I cash out my options?
There are a couple things to keep in mind before exercising your options . Exercising is a legal term that means to put into effect a right that is specified in a contract. As an option holder, you have the right to buy or sell the underlying company shares at a specified price on or after a future date. That preferential price of the shares is the strike price , while the future date refers to your vesting period . You have to wait until that date to exercise your options.
How accurate is the calculator?
The calculator is accurate in its assessment of the future value of your stock option grants. However, since these grants are tied to the potential performance of the company all scenarios are purely hypothetical. There may be unanticipated variables that may increase or decrease the future value of the stocks. So it’s likely that you will do the calculations on a recurring basis.
This calculator has some limitation in estimating your final earnings. It does not take into account any taxes that you may be subject to , so further work may be needed to assess the after-tax value of your earnings.
Using the calculator
The annual stock option calculator is very easy to use. You just have to supply some information about your company’s stock options. Let’s review this together starting with the current stock price .
Step 1 : You can add the current stock value to the first line of the calculator. You can use the up or down arrows to make this input easier. This is the current market price of the company stocks.
Step 2 : On the second line of the calculator you should include the value that the stock appreciates at . This is the rate of growth that is expected from the underlying shares of the issued options.
Step 3 : The third line of the calculator requires the number of years you expect to hold these options. You may add any value between 3 and 25 years here.
Step 4 : Finally on the fourth line you should include the amount of annual stock option grants you will be given each year. This amount is pre-determined on your contractual agreement with your employer.
Once this information is added to the calculator, you can view your results.