What does aggregate intrinsic value represent in the context of stock options?

What does aggregate intrinsic value represent in the context of stock options?

• A. The sum of intrinsic values for all exercised options during the period.
• B. The total amount paid to exercise options.
• C. The market value of all outstanding options.
• D. The compensation expense recognized for RSUs.

Answer: (C)

Aggregate intrinsic value is the total value that would be realized from the stock options if all of them were exercised right now. It reflects the value of the outstanding option rights in the market at the current stock price, capturing the immediate payoff you’d get from exercising (S minus K for in-the-money options) across all outstanding options. This focuses on the value of the options themselves as of today, not the cash paid to exercise, not the value of options that were actually exercised during a period, and not compensation for RSUs. Hence, describing it as the market value of all outstanding options aligns with the idea of the current, aggregate value available from those options.

Aggregate intrinsic value is the total value that would be realized from the stock options if all of them were exercised right now. It reflects the value of the outstanding option rights in the market at the current stock price, capturing the immediate payoff you’d get from exercising (S minus K for in-the-money options) across all outstanding options. This focuses on the value of the options themselves as of today, not the cash paid to exercise, not the value of options that were actually exercised during a period, and not compensation for RSUs. Hence, describing it as the market value of all outstanding options aligns with the idea of the current, aggregate value available from those options.