23 May 2009
The expected life of the options would depend on the option maturity and the vesting period. Some firms have a system of graded vesting for instance Axis Bank's ESO's get vested in 30:30:40 ratio after 3,4 and 5 years. Estimating the expected life of option will take into account this vesting pattern plus life of option after vesting.
It also takes into account possible forfeitures on account of grantee employees humping the ship.