I do independent research on EA topics. I write about whatever seems important, tractable, and interesting (to me). Lately, I mainly write about EA investing strategy, but my attention span is too short to pick just one topic.
I have a website: https://mdickens.me/ Most of the content on my website gets cross-posted to the EA Forum.
My favorite things that I’ve written: https://mdickens.me/favorite-posts/
I used to work as a software developer at Affirm.
I had an idea for a different way to evaluate meta-options. A meta-option behaves like a call option where the price equals the current value of the equity and the strike price equals the cash salary you’d be able to get instead.[1]
If I compare an equity package worth $100K per year versus a counterfactual cash salary of $80K and assume a volatility of 70% (my research suggests that small companies have a volatility around 70–100%), the call option for the equity that vests in the first year is worth $38K, and the call option for the equity that vests in the 4th year is worth $62K (which is equivalent to a 13% annual return). So on average, a meta-option on a 4-year equity package is worth somewhere in the ballpark of a 20% annual return.
[1] This is kind of wrong because with a normal stock option you don’t have to pay the strike until you exercise, but with an employee meta-option, you have to give up your counterfactual salary as soon as you start working, and you don’t vest for the first year so you have to give up a full year of cash salary no matter what. If you have monthly vesting, the fact that you have to pay at the beginning of the month instead of the end doesn’t matter much.