underlying asset

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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.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

References in periodicals archive ?

Many of these large options traders are wealthy individuals or institutions who may have unique information or theses related to the underlying stock.

Large Option Trader Makes Bearish Long-Term Bets Against PG&E

Nonqualified options and ISOs are taxed at long-term capital gains rates when the underlying stock is later sold, as long as the relevant holding period requirements are met (long-term capital gain treatment typically requires a one-year holding period, but ISOs are subject to a subject to a special two-year holding period requirement for long-term capital gain treatment).

GOP Tax Reform Rattling Stock Option Strategies

This month's impressive return was driven by a combination of superior underlying stock selection (3 of our largest positions were up >5% in the month) and the tailwind of a strengthening IRR (up c.

Market Insight

First, the debate on the impact of SSFs on the underlying stock market dynamics has intensified in Pakistan's market after the market crashed in 2005 and later in 2008.

Resumption of Single Stock Futures (SSFs) with stringent regulations and their impact on the risk characteristics of the underlying stocks

DGCX Single Stock future contracts are designed as Quanto style mini size futures which mirror the prices of the underlying stock in US Dollar terms.

DGCX launches Global Single Stock Futures

The company said the reverse stock split will affect all issued and outstanding shares of its common stock, as well as common stock underlying stock options, restricted stock units, warrants and preferred stock outstanding immediately prior to the effectiveness of the reverse stock split.

Rentech authorises one for ten reverse stock split

bank that entitles the shareholder to all dividends and capital gains of the underlying stock. ADRs trade like stocks on U.S.

Defining Terms

Each weekly offering will have a separate OneChicago symbol which generally will be the underlying stock plus 1W for the first Friday of the month, 2W for the second Friday of the month, and so forth.

OneChicago expands futures product suite

The UAE will allow issuance of warrants, a financial instrument that entitles the holder to buy the underlying stock of the issuing firm.

UAE to allow issuance of warrant to boost market

Typically, compensatory stock options have a strike price equal to the fair market value of the underlying stock at the time of grant (1) and have a vesting period of three to five years, with options vesting ratably over the period.

Tax consequences of distributing equity compensation rights in divorce

These bonds and the underlying stock will be kept for at least 90 days after the completion of the stock sale, subject to exceptions, the vendor explained.

Credit Agricole gets EUR224m for remaining Bankinter shares

A put option gives the holder the right to sell the specified quantity of the underlying stock at the strike price on or before expiration date.

Sensitivity of option contracts/Pasirinkimo sandoriu jautrumo veiksniu tyrimas

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