It is highly beneficial to have stock options in your possession. But these options are profitable only when you exercise them at the time the stock price is higher than the strike price. Using this calculator, it is easy to find out the actual stock price and your gain by entering information regarding current stock price, number of options you hold, number of years you want to hold those options, option strike price, and expected appreciation rate of the stocks.
Current stock price
The current price of the stocks of your company in the capital market. For this employee stock options calculation, it is assumed that stock price is equal to the options strike price. If the current stock price in the capital market exceeds the strike price, you can gain from exercising the stocks.
This is the accelerated rate of return you are expecting from the underlying stocks of the issued options. Your options are ‘in the value’ only when the underlying stock price start to increase beyond the strike price. Don’t forget the rate of return offered on other investment assets while defining your expected rate of return.
Number of options
Total number of options you have been awarded by the company.
The stock price at which these options were issued to you. To gain from the stock options, the stock price must rise above the strike price.
Number of years
The planned number of years you don’t want to sell the options. You can hold the options up to 25 years.