When a Water item, or multiple Water items are selected the SELECTION - TOOLS menu will be available. The SELECTION - TOOLS menu contains tools that allow you to adjust your Water Level and create Boundary items at terrain intersections with the water that can be used for further volume analysis. 

Water group

ClipClips the Water item's extent to a selected Boundary. Select both the Water Item and desired Boundary to enable the Clip tool.
Water LevelDisplays the Water Item's current level and allows adjustment of the level through the arrows, or by entering desired level.
Intersect TerrainCreates a Polyline or Boundary item where the water intersects with the terrain.  This is a Peak feature only.

Result: Boundary or Polyline