Underlying

(redirected from underlie)
Also found in: Dictionary, Thesaurus, Legal, Encyclopedia.
Related to underlie: defines

Underlying

What supports the security or instrument that parties agree to exchange in a derivative contract.

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.
References in periodicals archive ?
The payment of principal and interest on these instruments depends on the cash flows from the assets in the pool that underlies the new securities.
Projected to be essentially revenue neutral, the tax reform underlies a budget with a continuing, moderate structural imbalance and a huge $1.
However, the hills to the northwest and southeast of the property contain Chilitos formation volcanics, and it is likely that this formation underlies the claim group.