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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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

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 ?
Certain underlying stocks are expected to generate higher demand, which is also expected to enhance the global appeal of the Qatar Stock Exchange, which is now in the "emerging" status according to various global index compilers.
The name "index" reflects the idea that by buying the fund an investor in effect immediately owns a broad index of the underlying stocks. All you must do is pay an intermediary 6 like Vanguard, the investment company Bogle founded, which now manages US$5.1 trillion in assets 6 a small, built-in fee in exchange for spreading your money out across the market.
The search for a scapegoat will no doubt continue after the VIX surge last week contributed to the 10-11% correction on underlying stocks, along with the demise of the XIV inverse VIX short-volatility index.
The major reforms such as mentioned below for which market expert believe will fuel the growth in the economy and may benefit the underlying stocks in ETF.
This would inevitably hurt the EGPT's returns even if the underlying stocks, denominated in pounds, do well," the report confirmed.
In this study, an attempt is made to identify changes in the volatility dynamics of underlying stocks after resumption of SSFs in KSE with tighter regulations than before and whether stringent regulations are justified or not.
Small moves on the benchmark indices masked bigger price swings in underlying stocks as earnings season got underway.
The bank keeps the underlying stocks in the index to 20, because after its multi-layer screening, it expects to find only about 25 to 28 stocks that are likely to qualify.
The Group Securities has been appointed for its considerable expertise in the local stock market; having acted as a liquidity provider in the underlying stocks since2008.
It differs from effort regimes under multiannual management plans in that the effort allocation is fixed and does not evolve year by year with management targets or quota allocations for underlying stocks. It was set up in 1995 when Spain and Portugal joined the European Union.