Employee Stock Option Value Calculator
Estimate theoretical employee option value per share with a Black Scholes model and a separate fixed growth scenario.
How the calculator works
Enter the strike price and current fair market value in USD per share. Add an annual growth scenario, assumed time remaining, risk free rate, and volatility. The model uses the last four inputs as assumptions, not company or market forecasts.
Review theoretical option value, intrinsic value, and time value per share. The fixed growth scenario shows a separate terminal FMV and intrinsic value. The table compares hypothetical current FMVs while holding the model term constant.
Use the outputs to compare assumptions. The table is not a future exit payoff table, and strike plus model value is not the holder break even price for a granted option. Results do not include option count, vesting, exercise cost across a grant, taxes, or liquidity.
The Black Scholes calculation is a simplified European call model with no dividend yield. Employee options can have vesting, early exercise, nontransferability, and other terms that this per share estimate does not capture.
Step by step
- Enter per share prices and model assumptions
- Review current value and the separate growth scenario
- Compare same term hypothetical FMV rows
Worked example
Example inputs are a $10 strike, $15 current FMV, 20% annual growth, four years, a 4% risk free rate, and 40% volatility. The model returns $7.6996 option value per share, $5 intrinsic value, $2.6996 time value, and $17.70 for strike plus model value.
At 20% annual growth for four years, the separate fixed growth scenario gives a $31.10 terminal FMV and $21.10 intrinsic value per share. This is a mathematical scenario, not a forecast or probability.
When this calculator is useful
Use this calculator to compare per share theoretical call values under different FMV, volatility, and time assumptions, alongside a separate fixed growth scenario.
Use grant documents and qualified accounting, legal, or tax guidance for vesting, exercise, transfer restrictions, grant valuation, and tax treatment.
Common interpretation errors
Do not read the fixed growth scenario as a prediction or the hypothetical FMV rows as dated future outcomes. Change one assumption at a time and compare the resulting per share estimates.
Do not multiply a per share estimate by all granted options without accounting for vesting, exercise terms, taxes, and sale restrictions. This page does not calculate those effects.
Model formulas
European call value: C = S×N(d1) − K×e^(−rT)×N(d2)
d1 = (ln(S/K) + (r + σ²/2)×T) / (σ×√T)
d2 = d1 − σ×√T
Intrinsic value = max(S − K, 0)
Time value = max(C − intrinsic value, 0)
Fixed growth scenario: projected FMV = S×(1 + g)^T; projected intrinsic = max(projected FMV − K, 0)
S is current FMV per share, K is strike per share, r is the annual risk free rate, σ is annualized volatility, T is assumed time remaining in years, and g is the annual growth scenario. The normal distribution function is approximated. The model assumes a European call with no dividends.
Limitations and assumptions
This is a theoretical European call model with no dividends and an approximate normal distribution function. It treats the entered time as an assumed model term and growth as a fixed annual scenario. It does not assess accounting valuation compliance, employee grant value, vesting, exercise rights, nontransferability, expected term, option count, taxes, or liquidity. The estimate is per share and does not imply that shares can be sold.
Key terms
- Black Scholes call model
- A European call pricing model that estimates option value from current FMV, strike, time remaining, risk free rate, and volatility, assuming no dividends.
- Intrinsic value
- The amount by which FMV exceeds strike, with a minimum of zero. At expiry this is the call payoff per share after the strike and before fees or taxes, subject to the actual plan terms.
- Time value
- The difference between theoretical option value and intrinsic value. It reflects the model value of remaining time under the entered assumptions.
Compare related questions
Equity Dilution Calculator models how ownership percentages change across funding rounds, a separate question from per share option value.
Risk Reward Ratio compares a planned payoff on a tradable position. This calculator does not estimate grant value, share count, liquidity, or tax results.
FAQ
How does this option value estimate work?
The Black Scholes European call model uses current FMV as S, strike as K, annual risk free rate as r, volatility as sigma, and assumed time remaining as T. It estimates a per share theoretical option value. It assumes no dividends and does not value a specific employee grant or its restrictions.
What do the FMV scenarios show?
The table applies eight hypothetical FMVs from one half to five times the strike. Each row reprices the call using the same assumed time remaining. These are spot value comparisons, not future exit payoffs. A payoff at expiry is intrinsic value only.
How are growth and volatility used?
Volatility and time remaining affect the theoretical option value in the model. The growth input separately compounds current FMV at a fixed annual rate to show a terminal FMV and intrinsic value. Neither output gives the probability of reaching that price.
Is strike plus model value my break even price?
Strike plus model value adds the strike to the current theoretical option value. It is a comparison for a hypothetical purchased call, not an employee option holder break even price. The calculator does not know whether an option was purchased or what was paid for a grant.
Does this calculate my employee grant value or taxes?
No. The model omits vesting, exercise timing, employee option transfer restrictions, dividends, and tax. It also does not estimate grant accounting value or whether shares can be sold. Review the plan documents and relevant professional guidance for those questions.
Related tools
Equity Dilution Calculator models ownership changes after financing. Risk Reward Ratio compares payoff assumptions for a tradable position. Both answer different questions from this per share option model.