Option exercise calculator: cash needed and breakeven price
What exercising really costs in cash: strike, tax, and the price the stock has to reach before you are whole.
Updated November 4, 2026 Sources and methodology
Federal income tax only. Exercising NSOs also triggers payroll tax on the spread; exercising ISOs does not.
The three costs of exercising
- Strike cost: options × strike. Real cash, paid to the company.
- Tax at exercise: NSO spread at ordinary rates, or ISO spread at AMT rates. For ISOs this is often the largest number and it is not withheld.
- Opportunity cost: the cash is locked in illiquid or restricted stock until you sell.
Breakeven, defined
Breakeven price = (strike cost + tax due) ÷ options. At that price you recover exactly what you put in. For an ISO exercise funded just below the AMT crossover the breakeven is close to the strike; for an exercise deep into AMT it can be 30–50% above the strike, which is the number worth checking before you commit savings.
Worked example
10,000 ISOs at an $8 strike, with the stock at $25 and $180,000 of other income, filing single. The spread is $170,000, the strike costs $80,000, and the AMT works out to $35,948, so the exercise ties up $115,948. Breakeven is $11.59 a share, well below today's price. The risk is not the breakeven but the AMT paid on a valuation that can fall before you sell.
Typical exercise patterns
| Pattern | Cash profile |
|---|---|
| Cashless (public stock) | No outlay; shares sold to cover strike and withholding |
| Net exercise | Company withholds shares; you receive the net |
| Early exercise (private) | Strike paid in cash, 83(b) election filed within 30 days |
| Exercise-and-hold (ISO) | Strike plus AMT from savings, held for capital-gain treatment |
Frequently asked
How much cash do I need to exercise options?
Strike price × number of options, plus any tax due in the exercise year. For NSOs that tax is real cash withheld or owed; for ISOs it is AMT payable with the return, and it can exceed the strike cost itself on a high-spread grant.
What is the breakeven share price?
The price at which selling the shares returns exactly what you spent on the strike plus tax. Below that price, you would have been better off not exercising. For ISOs the AMT is already paid, so the breakeven has to clear the tax as well as the strike.
Can I exercise without cash?
A cashless exercise uses a broker to sell enough shares at exercise to cover the strike and withholding; a net exercise has the company withhold shares instead. Both are common at public companies and rare for private stock, where you must fund the strike yourself.
Sources. 2026 brackets, standard deduction, AMT exemption and phaseout: IRS Rev. Proc. 2025-32. Supplemental withholding: IRS Publication 15. The breakeven uses federal tax only; add your state rate for a full figure.