Valuation and returns
Stock option value calculator
Employees and advisers ask what their options could be worth. This turns option count, strike price and an exit value into a dollar figure.
An illustration, not advice. Preferences ahead of common, taxes and vesting can reduce what option holders receive.
How it works
An option gives the right to buy a share at the strike price. At an exit, the value per share is the exit value divided by the fully diluted share count at that time, which is larger than today's after further rounds.
The gain is the value per share minus the strike price, times the number of options. Liquidation preferences can reduce what common holders receive at smaller exits.
The formula
- Shares at exitFully diluted shares today / (1 - dilution before exit).
- Value per shareExit valuation / shares at exit.
- GainOptions x (value per share - strike).
Worked example
20,000 options at a $0.50 strike, 10 million shares today, 30% dilution and a $200 million exit: each share is worth $14 at exit, the options $280,000, and the gain before tax is $270,000.
Put the numbers in your data room
The grant ledger, the option plan and board approvals for every grant belong in the data room. Missing approvals are among the most common Series A diligence findings.
Stock option value calculator FAQ
Why does my percentage shrink before exit?
Later rounds issue new shares. The calculator assumes a dilution rate you choose.
Do preferences affect options?
Yes. At smaller exits, preferred investors may take a large part of the proceeds before common holders.
What about tax?
It depends on the option type and your country. Speak to a tax adviser.