🎯Stock Option Vesting Value Calculator

Calculate stock option intrinsic value by vesting year from strike price and current price

Stock Option Vesting and Intrinsic Value

A stock option gives you the right to buy company shares at a fixed price (the strike price) in the future. Vesting is the schedule by which this right is earned over time. The standard Silicon Valley structure is 4-year vesting with a 1-year cliff: 25% vests after 12 months of service, then 1/48th vests each month thereafter.

Intrinsic value formula: (Current Price − Strike Price) × Vested Shares. If your strike price is $5 and the stock is at $20, your intrinsic value per share is $15. With 10,000 options and a standard 4-year vesting, Year 1 cliff vesting of 2,500 shares is worth $37,500. Total value at full vesting: $150,000. Note: this is pre-tax; ISOs and NSOs are taxed differently.

Frequently Asked Questions

What is the difference between ISOs and NSOs?

ISOs (Incentive Stock Options) get favorable tax treatment — gains taxed as long-term capital gains if holding periods are met. NSOs (Non-qualified Stock Options) are taxed as ordinary income at exercise. Most startup employees receive ISOs.

What is AMT (Alternative Minimum Tax) and options?

Exercising ISOs can trigger AMT. The spread (fair market value minus strike price) at ISO exercise is an AMT preference item. In high-spread situations, consult a tax professional before exercising.