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Option Model Assumptions

Option Valuation

Black-Scholes Model

Black-Scholes FAQ

ESPP Valuation Tools

Binomial Model

Volatility Tool

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Model Comparison

Private Company Package

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Current Accounting Standards Codification, ASC 718 (formerly FAS123r) requires that companies that issue stock-based payments must now determine a valuation and expense these options in their financial statements.

One possible solution for option valuation is the use of the well-established Black-Scholes-Merton model. This venerable model has been modified for use with company-issued stock options and warrants (the original Black-Scholes model only applies to market-traded options).

The Black-Scholes model relies upon a set of inputs that define the behavior of the model and the resulting valuation output. These inputs are static since they allow a single possible outcome.

Our model takes inputs from the 'Option Assumptions' sheet and uses this information to produce the output valuation and a variety of important statistics on the 'Model Results' sheet. If any inputs are out of range, an error will appear indicating the source of the error and the expected range.

Note, we also provide a Black-Scholes model to value ESPP grants for our customers with ESPP plans. Please see our ESPP Software page for details.

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