Underlying instrument

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Underlying Instrument

A security, commodity, or other asset described in a derivative contact. For example, in an option contract giving the holder the right to buy so many shares of AT&T, the underlying instrument is stock in AT&T. Likewise, in a futures contract on so many barrels of refined oil, the underlying instrument is refined oil.

Underlying instrument.

An underlying instrument is a security, such as a stock, a commodity, or other type of financial product, such as a stock index, whose value determines the value of a derivative investment or product.

For example, if you own a stock option, the stock you have the right to buy or sell according to the terms of that option is the option's underlying instrument.

Underlying instruments may also be called underlying products, underlying interest, or sometimes the underlying investment.

References in periodicals archive ?
Unlike other crypto financing projects where participants receive what is known as utility tokens, Bitwala will offer tokens that represent equity in the underlying company.
The Fool responds: You were engaging in "technical analysis'' there, which most of us at Fool headquarters avoid, as it's focused mainly on stock-price movements instead of the health and prospects of the underlying company.
A credit default swap is a kind of derivative where the seller gets a payout in case a credit default occurs, ie the underlying company folds.
Companies would also be forced to recognise the volatility of asset returns in their profit and loss, which could mask the genuine profitability of the underlying company.
The factory is jointly owned by Wartsila and Shanghai Marine Diesel Engine Research Institute, an underlying company of China Shipbuilding Industry Corporation (CSIC).
To best play the tracking-stock craze, Christmas recommends evaluating the value of the underlying company.
By the same token, they do not contain any qualitative analysis of the underlying company strategy or the factors behind particular financial results.
The answer was to spin off their R&D activities into partnerships in which limited partners put up the money for the underlying company to continue developing the technology.
8 percent for share price relative to net asset value/share -- the value of the asset and not the underlying company.
According to the company, a total number of 2,584,615,655 voting rights were attached to the 2,429,723,768 underlying company shares (referred to as 'theoretical voting rights'), including 10,589,062 voting rights attached to the 10,589,062 company shares held by the company, also cannot be exercised at shareholders' meetings pursuant to the provisions of the Articles L.
But more typically, a penny stock's underlying company offers more potential than performance, aiming to earn zillions once it strikes gold or cures cancer.