Calculator
This tool helps employees evaluate the potential value of their stock options, aiding in financial planning and investment decisions.
Results
Potential Value
$0.00
Data Source and Methodology
All calculations are based on the standard Black-Scholes model for option valuation. For more information, visit the Investopedia article.
The Formula Explained
Potential Value = (Market Price - Option Price) × Quantity
Glossary of Terms
- Option Price: The set price at which the employee can purchase the stock.
- Market Price: The current price of the stock in the market.
- Quantity: The number of options granted.
- Potential Value: The potential financial gain from exercising the options.
How It Works: A Step-by-Step Example
Consider an employee with an option price of $50, a market price of $70, and 100 options. The potential value is calculated as:
($70 - $50) × 100 = $2000
Frequently Asked Questions (FAQ)
What are employee stock options?
Employee stock options are contracts that give employees the right to buy company stock at a set price.
How is the value of stock options calculated?
The value is determined by the difference between the market price and the exercise price of the stock.