### U

#### Underwater (Out-of-the-money)

Refers to options when the stock’s current market price is below the grant price on the option. Example: an option priced at $20 when the stock is trading at $15. NOTE: underwater options may have time value.

### V

#### Vested

The portion of an employee’s options that are eligible to be exercised.

#### Vesting Date

The date that a set of options can be exercised.

#### Vesting Period

The period of time required before any options can be exercised by employees.

#### Cliff Vesting

An all-or-none vesting option where the employee’s options become vested on one date. Until that date, the options are considered 0% vested.

#### Performance Vesting

Vesting that is tied to predetermined goals set by the company, typically related to certain earnings or revenue targets.

#### Straight Vesting

When the percentage of options exercisable each year is the same (i.e. 25% for 4 years).

#### Value at Risk (VaR)

VaR is a statistical method of valuing risk developed by banks to evaluate the overnight risk inherent in their portfolios. It is based on the concept of lognormal distribution. VaR measures how large a loss might be, when incurred due to market risk over some time frame and at some confidence level. In reference to company stock and options, VaR is used by StockOpter.com to measure the risk inherent in vested options and held stock.

#### VaR Ratio

A metric calculated by dividing Time Value of an option by the VaR (Value at Risk). It is a comparison of the theoretic potential (Time Value) to the theoretic risk of the option at the current time. The lower the TV/VaR percentage, the more compelling is the argument for diversifying the option (exercising and selling). For example, a ratio of 25% means that the theoretic risk is 4 times as large at the theoretic potential. Please note, while the value of this ratio could be infinitely large, a 1,000% ceiling has been asserted.

#### Volatility

Stock Price Volatility is the annualized standard deviation of the changes in stock price. This value is used in the Black Scholes and VaR calculations. For publicly traded companies it can be found in the annual report (10-K) which can be found at finance.yahoo.com (SEC Filings) or at www.ivolatility.com. For private companies it can be estimated from publicly traded peers. For more info see the BSV Concept Tutorial in the Dashboard.