underlying asset

(redirected from Underlying Stocks)

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 ?
the net gain in these underlying stocks since the contracts were entered
Hence, this study is motivated to extract information on the warrant market by documenting and analyzing the impact of warrant listings on the trading behaviour of underlying stocks on Bursa Malaysia.
Weightings of underlying stocks in each segment are adjusted as needed for occasional additions and deletions due to market entry or market departure, stock issuance or repurchases, stock splits, mergers or acquisitions, and changes in status of a company's interactive Best's Rating.
Professional investors who engage in sophisticated trading strategies involving the options and futures, and the underlying stocks, often must buy or sell large amounts of those securities to settle up their positions at expiration.
In many cases, convertibles declined in value, while their underlying stocks increased.
The dividends paid on the underlying stocks are passed through to the unit-holders in their full amount on a quarterly basis similar to the dividend policy of most major Canadian corporations.
Biotech BOXES(SM) due January 30, 2032, Basket Opportunity eXchangeablE Securities(SM) Exchangeable for a Cash Amount Based on the Closing Prices of the Underlying Stocks of the AMEX BIOTECHNOLOGY INDEX (CUSIP: 61744Y413)
We believe the idea of having a tradable security that represents ownership of an entire grouping of underlying stocks through a single investment will appeal to the different investing strategies of both the retail and institutional community," Jones said.
Another form of portfolio insurance involves using options or futures contracts in order to hedge against market movements in the underlying stocks for these contracts, where the underlying stocks are already held in a portfolio.
High liquidity of the underlying stocks provides that OMXB10 can be used as a good basis for derivatives.
the difference between the value of the underlying stocks held via CFDs
With approximately 5,000 underlying stocks, the Dow Jones Wilshire 5000 Composite Index represents all listed U.