1. ESOs: Introduction
  2. ESOs: Accounting For Employee Stock Options
  3. ESOs: Using the Black-Scholes Model
  4. ESOs: Using the Binomial Model
  5. ESOs: Dilution - Part 1
  6. ESOs: Dilution - Part 2
  7. ESOs: Conclusion
by David Harper

In this tutorial we review the accounting and valuation treatment of employee stock options (ESOs) and illustrate the best ways for investors to incorporate them into their analysis of stock. In the next section, we begin with a summary of the accounting treatment of ESOs, and then in the third and fourth sections we progress into a review of the primary options-pricing models: the Black-Scholes and its likely successor in 2005, the binomial model. In the fifth and sixth sections, we will consider adjustments you can make to incorporate the cost impact of stock options into your equity valuations.

ESOs: Accounting For Employee Stock Options
Related Articles
  1. Investing

    Employee Stock Options (ESO)

    Employee stock options are a form of equity compensation granted by companies to their employees and executives.
  2. Trading

    Expensing Employee Stock Options: Is There A Better Way?

    In 2009, Senators Carl Levin and John McCain introduced a bill to stop the excessive deductions for ESOs. But is there another solution?
  3. Trading

    Breaking Down The Binomial Model To Value An Option

    Find out how to carve your way into this valuation model niche.
  4. Trading

    The "True" Cost Of Stock Options

    Perhaps the real cost of employee stock options is already accounted for in the expense of buyback programs.
  5. Trading

    Circumventing the Limitations of Black-Scholes

    Learn the ways to get around the flaws in trading models like Black-Scholes.
Frequently Asked Questions
  1. Which Schools Did Warren Buffett Attend?

    Warren Buffett attended multiple prestigious schools on his path to success, but he places much more significance on real-world ...
  2. What are some examples of expansionary monetary policy?

    Learn about expansionary monetary policy and how central banks use discount rates, reserve ratios and purchases of securities ...
  3. What is the role of the nation-state in globalization?

    Learn about the evolving role of the nation-state in an increasingly globalized world as fewer boundaries restrict international ...
  4. What are some examples of positive correlation in economics?

    Learn the most common examples of positive correlation in macroeconomics and microeconomics, including demand and price, ...
Trading Center