underlying asset

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Related to underlying asset: strike price, Underlying instrument, Underlying Value

Underlying asset

The security or property or loan agreement that an option gives the option holder the right to buy or to sell.

Underlying Asset

In a derivative or warrant, the security, property, or other asset that gives value to the derivative or warrant. For example, in an option giving one the right to buy stock in Johnson and Johnson, the underlying asset is the stock in Johnson and Johnson. An underlying asset may many things, such as a physical commodity, a security, a piece of land, or part of a business.

underlying asset

1. The physical and financial asset to which a security holder or a class of security holders has a claim. An analyst may believe that a stock is underpriced on the basis of the value of the firm's underlying assets and the potential earning power of those assets.
2. The asset that underlies and gives value to a security. The underlying asset of a stock option is the stock that the option can be used to purchase. Likewise, the underlying asset of a convertible bond is the stock for which the bond can be exchanged. The market value of a security is directly affected by changes in the value of any underlying asset into which it may be exchanged.
References in periodicals archive ?
If the underlying asset is not property, a lease would be classified as a Type A lease unless either (or both) of the following were true:
These contracts having indices as the underlying assets would give the buyer a right to buy or sell a specific level of the underlying index.
A callable bull/bear contract is a derivative that provides investors with a leveraged investment in underlying assets, which can be a single stock or an index.
Likewise, a clearing facility for privately negotiated derivatives on underlying assets that are securities might best be regulated by the Securities and Exchange Commission (SEC).
at 12) has the potential to produce a mismatch in character between the NPC used as a hedge and the underlying asset or liability.
These structures, originally issued in the form of collateral mortgage obligations CMOS) and now issued as real estate mortgage investment conduits (REMICs), aggregate and then redirect the principal and interest cash flows coming from the underlying assets and assign payment priorities to different classes of investors.
Overcollateralization, another form of credit enhancement covering a predetermined amount of potential credit losses, occurs when the value of the underlying assets exceeds the face value of the securities.
HedgeStreet's Binary Option Hedgelet is an all-or-nothing option with a fixed payout of either $10 or $0, depending on the final value of the underlying asset (for example, oil) or event (for example, rise in the Fed Funds interest rate).
The third approach to valuing an enterprise is the cost approach or underlying asset approach.
The average distributable yields on the respective partnership interests are equal to approximately 6% of the underlying asset values of the partnership.
A covered warrant enables an investor to buy or sell an underlying asset at a pre-determined price.