This concerns Incentive Stock Options (ISOs). This is slightly different
from what the OP wants, but on the same general topic. This is how I model
my options, and I was looking for feedback, since I'm wondering if there's
a better way. Let's assume for simplicity:
- strike price is $1.20
- market value at exercise is $2.00
- market value at sale is $2.50
1) Grant time:
2001-01-01 * Stock Grant ; The options themselves cost $0. They simply
confer the right to buy stock at the strike price. Let's assume the strike
price is $1.20, as encoded in ORNG_120.
Assets:Stock-Options:Unvested 100 ORNG_120
Income:Stock-Options
2) Vesting time:
2002-01-01 * Stock Grant
Assets:Stock-Options:Vested 100 ORNG_120
Assets:Stock-Options:Unvested -100 ORNG_120
3) Exercise time:
2005-01-01 * Exercise
Assets:Stock-Options -100 ORNG_120
Expenses:Stock-Options 100 ORNG_120 ; We "spend" our option to
be able to purchase the stock at the strike price. So it's an expense.
Assets:Investments 100 ORNG {$1.20}
Assets:Bank -$120 ;100 x $1.20
4) Sale:
2006-01-02 * Sale
Assets:Investments -100 ORNG {$1.20} @
$2.50
Assets:Bank $250
Income:Stock-Options:Capital-Gains -$130
Areas for improvement:
- as the OP pointed out above, there is no easy way to calculate the price
of vested-but-unexercised, and unvested options
- ORNG was purchased at $1.20 at exercise time. This is suboptimal because
ledger, for example, would assume $1.20 was the market price of ORNG on
that date, which is untrue. Is there a way to model things better using
generic bookkeeping methods?
- others?
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