Start with the option count and the price spread
Grant size is not the same as exercisable count. The entered exercisable percentage first limits how many options participate in the scenario.
The strike price is the amount paid per share on exercise. Intrinsic value exists only when the entered future share price exceeds the strike; extra entered costs reduce the net scenario further.
Follow the calculation in decision order
Exercisable options = grant × exercisable percentage. Gross share value = exercisable options × entered future price. Exercise cost = exercisable options × strike price.
Intrinsic value = max(entered future price − strike price, 0) × exercisable options, less any entered extra costs. Probability-weighted value then multiplies the non-negative intrinsic result by the entered probability.
Worked example: from grant to weighted value
| Decision view | calculator result | What it tells you |
|---|---|---|
| Exercisable grant | 750 options | Only 75% of the 1,000-option grant participates in this scenario. |
| Gross shares and exercise cost | 13,500 gross value; 7,500 exercise cost | This separates the entered share value from the cash needed to exercise. |
| Intrinsic value | 6,000 | The 8-per-option spread is positive here; it is not a forecast of sale proceeds. |
| Probability-weighted value | 4,800 | The entered 80% probability discounts the intrinsic scenario without making it likely or certain. |
| Break-even or underwater case | 10 break-even price; 0 underwater gap in this fixture | At or below the 10 strike, intrinsic value is zero rather than a negative option value. |
Separate this scenario from RSUs and formal valuation
RSUs do not use an exercise-price spread in the same way; the RSU tool values entered units by tranche. This option model is therefore the better comparison when exercise cost and an underwater outcome matter.
Formal option valuation can also consider volatility, time to expiry, dividends and other award terms. This calculator excludes those factors, along with tax, dilution, liquidity and company outcomes, and must not be described as fair value.
How the Stock Option Offer Value Calculator calculation works
probabilityWeightedValue = projectedIntrinsicValue × realizationProbability
- probabilityWeightedValue
- Probability-weighted option value
- projectedIntrinsicValue
- Projected intrinsic value
- realizationProbability
- Realization probability
The calculator and article use this relationship consistently; the article does not reimplement the calculation.
projectedIntrinsicValue = max(projectedGrossShareValue − totalExerciseCost, 0)
- projectedIntrinsicValue
- Projected intrinsic value
- projectedGrossShareValue
- The projected Gross Share Value
- totalExerciseCost
- Total exercise cost
The calculator and article use this relationship consistently; the article does not reimplement the calculation.
totalExerciseCost = optionCount × exercisableFraction × strikePrice + additionalExerciseCosts
- totalExerciseCost
- Total exercise cost
- optionCount
- Option count
- exercisableFraction
- Exercisable fraction
- strikePrice
- Strike price
- additionalExerciseCosts
- Additional exercise costs
The calculator and article use this relationship consistently; the article does not reimplement the calculation.
breakEvenSharePrice = strikePrice + additionalExerciseCosts ÷ exercisableOptionCount
- breakEvenSharePrice
- Break-even share price
- strikePrice
- Strike price
- additionalExerciseCosts
- Additional exercise costs
The calculator and article use this relationship consistently; the article does not reimplement the calculation.
underwaterAmountPerShare = max(strikePrice − projectedFutureSharePrice, 0)
- underwaterAmountPerShare
- Underwater amount per share
- strikePrice
- Strike price
- projectedFutureSharePrice
- Projected future share price
The calculator and article use this relationship consistently; the article does not reimplement the calculation.
Value 1,000 options with 75% exercisable, a 10 strike, 18 assumed future price and 80% realization probability.
Inputs used in the Stock Option Offer Value Calculator worked example
| Input | Entered value | What it represents | Source class |
|---|---|---|---|
| Option count | 1,000 options | Whole option count in the offer. | user assumption |
| Exercisable fraction | 0.75 decimal | Fraction expected to become exercisable. | user assumption |
| Strike price | 10 currency units/share | Exercise price per option. | user assumption |
| Projected future share price | 18 currency units/share | Your assumed future share price. | user assumption |
| Additional exercise costs | 0 currency units | Other entered costs of exercise. | user assumption |
| Realization probability | 0.8 decimal | Your chance of realizing the intrinsic value. | user assumption |
Worked example: Stock Option Offer Value Calculator
The calculator normalizes the inputs above, applies Probability-weighted value, and returns the outputs below. The displayed result is therefore reproducible in the linked calculator.
| Measure | Result | Interpretation |
|---|---|---|
| Probability-weighted option value | 4,800 currency units | Projected intrinsic value multiplied by realization probability. |
| Projected intrinsic value | 6,000 currency units | Projected gross share value less exercise costs, floored at zero. |
| Total exercise cost | 7,500 currency units | Exercisable options times strike price plus extra costs. |
| Break-even share price | 10 currency units/share | Strike price plus extra costs per exercisable option. |
| Underwater amount per share | 0 currency units/share | Strike price less projected share price, floored at zero. |
Interpret the result and test Projected future share price
- Probability-weighted option value: 4,800 currency units. Projected intrinsic value multiplied by realization probability.
- Projected intrinsic value: 6,000 currency units. Projected gross share value less exercise costs, floored at zero.
- Total exercise cost: 7,500 currency units. Exercisable options times strike price plus extra costs.
- Break-even share price: 10 currency units/share. Strike price plus extra costs per exercisable option.
- Underwater amount per share: 0 currency units/share. Strike price less projected share price, floored at zero.
| Result | Baseline | Changed-input scenario | How to read it |
|---|---|---|---|
| Probability-weighted option value | 4,800 currency units | 5,880 currency units | Projected intrinsic value multiplied by realization probability. |
| Projected intrinsic value | 6,000 currency units | 7,350 currency units | Projected gross share value less exercise costs, floored at zero. |
| Total exercise cost | 7,500 currency units | 7,500 currency units | Exercisable options times strike price plus extra costs. |
| Break-even share price | 10 currency units/share | 10 currency units/share | Strike price plus extra costs per exercisable option. |
| Underwater amount per share | 0 currency units/share | 0 currency units/share | Strike price less projected share price, floored at zero. |
Checks that are specific to Stock Option Offer Value Calculator
- Option count is a positive whole number.
- Exercisable fraction is greater than zero for a result.
- Probabilities remain between 0 and 1.
What this Stock Option Offer Value Calculator guide includes and excludes
- Future share price and realization probability are user assumptions.
- The entered exercisable fraction applies to the full option count.
- Additional exercise costs are entered as one total.
Sources and method boundary
- Stock Option Offer Value Calculator methodology — Wage101 (accessed 2026-07-27): Canonical formulas, units, validation, calculator behavior and limitations.