Strategies for managing Employee Stock Options

For a while now I’ve struggled with how to decide when to exercise (and sell) Employee Stock Options. There is a great deal of research on standard options (including things like Black Scholes), but these include the concept of selling the options which is not available for Employee Stock Options.

In the past I have found some rough recommendations, one of which I took to heart: if the price appreciates by 50% from the strike price, sell half the options. However, this and other recommendations were really based on startup or high-growth companies.

Today I found this reference:

FPA Journal – Employee Stock Options: Using Monte Carlo Simulation to Create Exercise Strategies

This is much more in line with what I wanted to find, but it is just presented as examples. I guess I need to see if I can find a tool or some better spreadsheet instructions for putting something like this together.

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