Receiving options for your company's stock can be an incredible benefit. Even after a few years of moderate growth, stock options can produce a handsome return. Use this calculator to determine the value of your stock options for the next one to twenty-five years.
Stock Option Calculator (Canadian)
Stock Option Calculator (Canadian) Definitions
- Current stock price
- Current stock price. If this price is above your option strike price, you are already in the money. If it is currently below the option strike price, your options will not have any value until it exceeds the strike price.
- Stock appreciation
- This is the annual rate of return you expect from the stock underlying your options. Thanks to the leveraged nature of your stock options, once the underlying stock value has exceeded your strike price, the value of your options will increase at an accelerated rate. The actual rate of return is largely dependent on the type of investments you select. For example, the annual return of the S&P/TSX Composite Index for the 10 year period from December 31, 2009 through December 31, 2019 was 3.9% (source spindices.com). Over the same period the total annual return (including dividends) was 6.9% (source spindices.com). Savings accounts at a bank or credit union may pay as little as 2% or less. It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment.
- Number of options
- This is the number of stock options you were granted.
- Strike price
- The strike price is the stock price that your options were issued at. The underlying stock price must exceed the strike price for your options to have any value.
- Number of years
- The number of years you expect to hold these options. This can be any number from one to twenty-five.