Examlex
A boy standing on a cliff is watching a boat through a telescope as it approaches the base of the cliff directly below him. If the telescope is 175 feet above water level and the boat is approaching at 15 feet per second, at what rate is the angle of the telescope changing when the boat is 175 feet away?
Underlying Security
The asset upon which a derivative contract, such as an option, is based.
Option
A financial derivative that represents a contract giving the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified strike price on or before a specified date.
Employee Stock Options
A right, purchased from one party by another, granting the purchaser the option, but not the requirement, to either buy (call) or sell (put) a share at a pre-decided price during a specific timeframe or on a certain date.
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