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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Investors in MUSCIT can take comfort in the quality of the portfolio's underlying companies. As the uncertainties surrounding Brexit clear, we would expect to see renewed interest in the asset class," Cuming added.
no lock-up or other restrictions to dividends distributions at underlying companies' level), which reduces the rating differential between the holding and operating companies.
Damaged stocks are stocks that have low prices, but the underlying companies are doing very well.
Predictably, others rushed in to copy the scheme and for a while, it created income for investment banks and the underlying companies they were raising money for.
Ezdan's proposed delisting and rating downgrade of certain underlying companies had negatively influenced sentiments on the Qatar Stock Exchange (QSE), which remained under 10,000 levels this week.
All compliant stocks are checked to ensure the underlying companies of the investment instrument have an appointed Islamic board and state in their bylaws that they operate according to Islamic guidelines.
Instead, fund managers prefer to focus on the impact of currency moves on the earnings of the underlying companies in which they invest.
Your investment decisions will have a shelf life as many factors can change with the underlying companies you bought.
Recently launched Pomona Investment Fund, distributed by Voya Investments Distributor, LLC, said it has purchased a USD25 million portfolio in the secondary market of diversified private equity interests across 17 underlying funds and nine general partners, with over 300 underlying companies, from a US endowment.
About Tadawul's plunge, Basil Al-Ghalayini, CEO of BMG Financial Group, said the Saudi stocks price fall does not necessarily reflect the fundamentals of the underlying companies. "The Saudi economy still enjoys sound fundamentals, in view of its financial reserves, coupled with the newly appointed young decision-makers at the leadership level who come from the business community," Al-Ghalayini said.
Acknowledging that the underlying companies are, largely, unlisted companies in frontier markets, Emerging Crowd's focus is on "trying to make the whole thing as comfortable as possible for something that isvery high risk," says Tindall.