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 ?
Results of operations may include certain unusual and other items which have been separately disclosed, where appropriate, in order to provide a clear assessment of the underlying Company results.
Well investment was primarily driven by the improvement of underlying company fundamentals as the valuation continues to be sensitive to movements in EBITDA.
Unlike other crypto financing projects where participants receive what is known as utility tokens, Bitwala will offer tokens that represent equity in the underlying company. Bitwala's Equity Token Generation (ETG) event will take place before the end of the year.
Global investors are always looking for good quality issuers in order to offer comfort that the bond will be repaid at maturity in the event that the underlying company's share does not rise sufficiently and the convertible does not convert into shares.
You would have needed to study the operations of the underlying company that the stock URC represented.
Granted, if the underlying company sees great growth in its business, then it's likely that people will be willing to pay a higher price for the stock.
Sources in the QFC said they would not comment on individual entities but held that increased investment universe was beneficial for the underlying company as well as the investors.
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. We prefer "fundamental analysis,'' which examines growth rates, competitive advantages, financial health, management candor and skill, and so on.
It also applies to the ability of the parent company to run and administrate the underlying company which does not end until the moment of a conversion (Barber, 1993).
"I have the confidence that the underlying company is in the best position it has been in for many years to engage in strategic growth and improvement."
-The trust can hold assets via an underlying company of which the settlor, or chosen advisor, can be directors.The trustees then merely act as shareholders of that company.
Hundreds of orders are capable of being entered in a second, creating abnormal market volatility and wild swings in stock prices that have little to do with the underlying company's long-term ability to generate excess cash flow.