I don't think this is quite right. According to the formula,...

I don't think this is quite right. According to the formula, it's the ratio of the "price value" (i.e. it ignores any "time value") of the option (i.e. share price minus exercise price) to the share price that determines the number of shares acquired if using the cashless conversion facility. Further, as the number of shares issued is rounded down, it is never possible to receive the full number of shares you would otherwise be entitled to if using cashless conversion.

So in the examples you gave, with 1,000,000 options at an exercise price of $3.30:
- if the SP is $5, the "price value" of the option is $1.70, so cashless conversion would yield 1,000,000 * 1.7 / 5 = 340,000 shares.
- if the SP is $6.60, the "price value" of the option is $3.30, so cashless conversion would yield 1,000,000 * 3.3 / 6.6 = 500,000 shares.
- if the SP is $50, the "price value" of the option is $46.70, so cashless conversion would yield 1,000,000 * 46.7 / 50 = 934,000 shares.
- as the share price rises further, the number of shares issued will approach 1,000,000, but never quite get there.

The formula works like this to ensure that the price value of the options forfeited always matches the cost to exercise the remaining options the correspond to the number of shares issued. Taking a couple of the above examples:
- at SP of $5, 340,000 shares issued via $3.30 options would cost 340,000 * $3.30 = $1,122,000. In this case, 660,000 options are forfeited (1,000,000 - 340,000) with a "price value" of $1.70 ($5.00 - $3.30). The price value of those forfeited options is 660,000 * $1.70 = $1,122,000.
- at SP of $50, 934,000 shares issued via $3.30 options would cost 934,000 * $3.30 = $3,082,200. In this case, 66,000 options are forfeited (1,000,000 - 934,000) with a "price value" of $46.70 ($50.00 - $3.30). The price value of those forfeited options is 66,000 * $46.70 = $3,082,000.

So you can see in each instance, the cashless conversion works by sacrificing options with a certain price value to match the exercise price of the remaining options. As the time value of the options is ignored, all else being equal it probably makes sense to leave the conversion to as late as possible. Though the other goal would obviously be to perform the conversion at as high a share price as possible, thereby maximising the number of shares issued. So if a significant price spike occurred prior to option expiry, the holder may decide that was a good time even if the options had a significant amount of time left to expiry.