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We believe the best way to model stock option exercise strategies is to compare each one side by side, using the same assumptions for cost, taxes, timing, and risk.
Exercising now, waiting, and selling can produce very different after-tax outcomes. A strategy that looks strongest on upside alone can lose once cash required, taxes, and concentration risk are included. Secfi's modeling tool, Maeve, runs these comparisons from your own grant data.
A strategy that looks attractive at first can become less appealing once you include:
This guide explains how to model stock option decisions using tools like Secfi and how to build your own spreadsheet model.
Many employees find that gathering accurate inputs is harder than the formulas. Model these variables:
Taxes are often the largest and least expected cost when exercising options, and they can change which strategy comes out ahead.
Tax treatment differs significantly between ISOs and NSOs.
A purely numerical model can miss personal financial risk. Ask:
This matters most at private companies, where liquidity is limited.
Compare strategies on:
Then ask two questions: What is my guaranteed outcome? What is my best-case outcome?
Many employees struggle less with formulas and more with gathering accurate inputs and understanding tax implications.
Secfi helps startup employees and executives understand, finance, and make decisions about their equity. By combining financial expertise, proprietary tax modeling, and tools, Secfi enables you to evaluate different strategies, estimate taxes, and make informed decisions about when and how to exercise your stock options.
Through tools like Maeve, Secfi helps centralize this analysis, allowing you to model different scenarios, estimate taxes, and make decisions based on your actual financial profile, not rough assumptions.
Maeve can also integrate with your existing data sources (like Carta or uploaded grant documents), helping ensure your analysis is based on complete and accurate information.
Taxes are often the largest and least expected cost when exercising options. According to guidance from regulators like the IRS, tax treatment varies significantly between ISOs and NSOs.
Using a structured system like Maeve may help provide:
Secfi also offers financing and secondary sale support, which can help address liquidity constraints, especially when employees face short post-termination exercise windows.
Assume:
If the share price rises to $50:
If the price falls:
Trade-off:
We believe best way to model stock option decisions is to:
Tools like Secfi can simplify this process, but a well-built spreadsheet can achieve the same goal.
The key is not finding the highest upside strategy. It is choosing the strategy that fits your financial situation, risk tolerance, and liquidity needs.
Yes. Options like cashless exercise, net exercise, secondary sales, and non-recourse financing allow you to exercise without using personal savings or taking out a loan. Each option avoids personal debt but comes with different trade-offs in ownership, taxes, and upside.
Non-recourse financing allows you to exercise your options using external funding, with repayment only required if your company has a liquidity event (like an IPO or acquisition). The shares back the financing, not your personal assets, so you are not personally liable if there is no exit. There may be additional tax consequences if there is no exit.
The tool shown here uses artificial intelligence and is for illustrative purposes only and not necessarily indicative of future results and there is no guarantee that similar results can be achieved. The information provided by the tool is not professional advice and is not intended by Secfi, Inc., its affiliates, and Secfi representatives, to be deemed as investment, legal, tax or other professional advice or recommendations of any kind, or to form the basis of any decision to do or to refrain from doing anything. Secfi does not review the accuracy or completeness of the information provided to us within the tool.