Print This Page

Subject:   options question
From:   John

I like your website, but it didn't answer my question. I am trying to determine the fair market value of my employer-provided options package, which is with a public company. I have looked online for calculators, but none really fits my needs. I need to determine this quickly for negotiation purposes--any suggestions?

John

Answer

Date:   8 May 2002

Hello John,

I am not an expert in this area. Two pricing models for options are Black-Scholes and binomial option pricing. Try doing some research on those, including at your public library. Note the values determined using those models will be higher than the actual value, because your options aren't freely transferable.

If your options are substantial enough, you might look into hiring a business appraiser or a counselor that specializes in these arrangements.

Good luck!

Mike Gray

For more information about incentive stock options, request our free report, Incentive Stock Options - Executive Tax and Financial Planning Strategies.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this answer was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.