Market Volatility and Employee Stock Option Values

The stock market has been on a roller coaster over the last few months, but in general the S&P 500 index is still near its all time high. Consequently, most employee stock options granted in the last ten years are likely to be significantly "In-the-Money" (current stock price above the grant price) as illustrated by the above chart. This chart shows the S&P 500 over the past decade. It can be used as a general representation of the prices at...

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Black-Scholes v. Baroni-Adesi for Valuing Employee Stock Options

There are a variety of ways to calculate the Full Option Value (FOV) of employee stock options. The two most popular and relevant methodologies are Black-Scholes Merton and Baroni-Adesi Whaley. Detailed white papers on these methodologies can be found at the previous links, but the objective of this article is to simplify these complex formulas and explain the differences. .StockOpter.com can use either of these methodologies to calculate Full Option Value and Time Value. To change the methodology used by...

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Black Scholes and Employee Stock Option Education

IMAGE: iqoncept, 123rf.com Net Worth Strategies has been providing financial advisors with employee stock option risk analysis and tax planning tools since 1999 so it has witnessed firsthand a great deal of the development in employee stock option education. Here's a brief synopsis.... The internet bubble (1995 - 2000) instigated many companies to begin offering broad-based stock option programs. These companies had to provide participants with basic information about their stock option grants because options were new and mysterious. This...

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