underlying or underlier
An option or a future is a right or a commitment to buy or sell something at a future date. The underlying is the financial instrument that may or must be bought or sold in each option or futures contract. FAS 133, as amended by FAS 149, defines an underlying to be a specified interest rate, security price, commodity price, foreign exchange rate, index of prices or rates, or other variable (including the occurrence or nonoccurrence of a specified event such as a scheduled payment under a contract). An underlying may be a price or rate of an asset or liability but not the asset or liability itself. American Banker Glossary
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What supports the security or instrument that parties agree to exchange in a derivative contract. Bloomberg Financial Dictionary
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The stock, commodity, futures contract, or cash index against which a futures or options contract is valued. Chicago Mercantile Exchange Glossary
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underlying - covered warrant
The asset on which the covered warrant is based and derives its value. The underlying may be a security (such as shares), a share index ( e.g. FTSE 100), a commodity or a currency. Some warrants are based on a 'basket' of underlyings, which gives an investor exposure to the performance of more than one security for example. London Stock Exchange Glossary
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Financial instrument that underlies an option, future, warrant or other instrument. NYSE Euronext Glossary
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underlying un‧der‧ly‧ing [ˌʌndəˈlaɪ-ɪŋ◂ ǁ -ər-] adjective
1. underlying figure/rate ECONOMICS a rate or figure that shows the real level of inflation, earnings etc although it is not immediately obvious:
2. underlying security/share etc FINANCE the investment to which a derivative such as an option (= the right to buy or sell particular shares etc during a particular period of time) relates:
• If the warrant is held for its full 18-month life, the value of the underlying shares would have to rise at least 18.6% to make it profitable for holders.
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Used in derivative markets to describe the financial instrument or physical commodity on which a futures or options contract is based.
► See also Derivatives.
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underlying UK US /ˌʌndəˈlaɪɪŋ/ adjective [before noun]
► FINANCE, STOCK MARKET used to describe the shares, etc. to which something such as an option (= the right to buy or sell something in the future) relates: »
The option was sold requiring payment against delivery of the underlying security.
► ACCOUNTING, FINANCE used to describe the basic level or amount of something before anything else is added or taken away: »
Underlying conditions are favourable.
»They underestimated their underlying costs and ended up losing a lot of money.
»Last year the company had underlying earnings of $10.6m on $34m sales.
Financial and business terms. 2012.