Estimate the age at which holding exercised stock options may overtake selling immediately after accounting for exercise cost, taxes, expected stock growth, and the return available on immediate-sale proceeds.
Hold net at year y = future sale proceeds − exercise cost − ordinary tax − capital-gain tax
Break-even occurs when hold net first equals or exceeds the future value of immediate-sale net proceeds.
The main result is the first projected age when the after-tax hold value meets or exceeds the immediate-sale alternative.
This is a simplified scenario, not a recommendation. It omits AMT, volatility, vesting, expiration, dividends, concentration risk, and changing tax rates.
At age 35, with 1,000 options, a $10 strike, $25 share price, 8% expected stock growth, 4% alternative return, 32% ordinary tax, and 20% capital-gain tax, holding first overtakes the alternative at about age 36.
It compares after-tax value from holding exercised shares with investing immediate-sale net proceeds elsewhere.
The calculator reports that no break-even occurs within the projection horizon.
No. The model begins at exercise and does not determine when exercise must occur.
A sufficiently higher stock-growth assumption can overcome the tax drag and alternative return quickly.
No. The stock-growth input is deterministic; actual concentrated-stock outcomes can vary widely.
| Scenario | Growth assumption |
|---|---|
| Hold exercised shares | Expected stock growth |
| Sell immediately | Alternative return on net proceeds |
| Break-even | First annual point hold net ≥ alternative value |