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 ?
Rodgers with the ability to exercise his options and sell a portion of the underlying Company common stock in an orderly manner and avoid concerns about the timing of the transactions.
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.
Private equity funds may contain a proportion of quoted shares from time to time, for example where the underlying company investments have been taken public but the holdings have not yet been sold.
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.
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.
In addition, the factors underlying Company forecasts are dynamic and subject to change and therefore those forecasts speak only as of the date they are given.
The purpose of each plan is to provide the executive officer with the ability to exercise his expiring options and sell the underlying Company common stock in an orderly manner and avoid concerns about the timing of the transactions.
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.
Teske with the ability to exercise his options and sell the underlying Company common stock in an orderly manner and avoid concerns about the timing of the transactions.