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 classic literature ?
The smooth richness of their diction; the amiable sweetness of their mood, their gracious caprice, the delicacy of their satire (which was so kind that it should have some other name), their abundance of light and color, and the deep heart of humanity underlying their airiest fantasticality, all united in an effect which was different from any I had yet known.
We do not know the inexorable law underlying coincidences.
In most of Tu Fu's work there is an underlying sadness which appears continually, sometimes in the vein that runs throughout the poem, sometimes at the conclusion, and often at the summing up of all things.
In both words the underlying idea is that of a body of men united by an oath.
This strange blending of odours consisted of something faintly and unpleasantly aromatic, mixed with another underlying smell, so unutterably sickening that he threw open the window, and put his head out into the fresh air, unable to endure the horribly infected atmosphere for a moment longer.
Levin saw that there was an idea underlying this question with which he did not agree.
These specific limitations, it will be evident, are outgrowths of his great underlying deficiency--the deficiency in spiritual feeling and insight.
Very rarely, therefore, did any one seek the motives underlying his praiseworthy turn for thrift; for it pleased others, for the most part, to set it down to a not unnatural wish to increase the amount of the savings that were to render his old age comfortable.
Her strong black brows spoke of temper easily aroused and hard to quiet; her mouth was small, nervous and weak; there was something dangerous and sulky underlying, in her nature, much that was honest, compassionate, and even noble.
He said that he considered the principles underlying all volunteer service fundamentally wrong, and that it seemed to him that calling for volunteers reflected upon the courage and loyalty of the entire command.
In the same way, an underlying mockery impaired the attraction of his otherwise refined and gentle manner.
There was something underlying the charming expression and the fascinating manner which my instinct felt to be something wrong.