Underlying Asset

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Dictionary Says

Definition of 'Underlying Asset'

A term used in derivatives trading, such as with options. A derivative is a financial instrument whose price is based (derived) from a different asset. The underlying asset is the financial instrument (e.g., stock, futures, commodity, currency, index) on which a derivative's price is based.

Investopedia Says

Investopedia explains 'Underlying Asset'

For example, an option on a stock gives the holder the right to buy or sell the stock for a specified amount (strike price) at a certain date in the future (expiration). The underlying asset for the stock option contract is the company's stock.

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'Underlying Asset'

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    http://www.investopedia.com/slide-show/options-strategies
    ... and are looking to generate additional profits (through receipt of the call premium),
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  • Why do futures' prices converge upon spot prices during the ...

    http://www.investopedia.com/ask/answers/06/futuresconvergespot.asp
    ... as time progresses. This is a very strong trend that happens regardless
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  • Short selling vs. purchasing a put option: how do the payoffs ...

    http://www.investopedia.com/ask/answers/05/shortvsput.asp
    ... short sale transaction are the two most common ways for traders to profit when the
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  • Instead Of Stocks, Trade A CFD

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    ... It allows for profits or losses to be realized when the underlying asset moves in
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  • What's the difference between a regular option and an exotic ...

    http://www.investopedia.com/ask/answers/05/063005.asp
    ... Barrier option: A type of option whose payoff depends on whether or not the
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  • An Introduction To Structured Products

    http://www.investopedia.com/articles/optioninvestor/07/structured_products.asp
    ... This note is fully principal-protected, meaning that you will get your $1,000
    back at maturity no matter what happens to the underlying asset. ...

  • Breaking Down Binomial Trees

    http://www.investopedia.com/articles/financial-theory/binomial-trees-black-scholes-model.asp
    ... With the binomial model, one can see the change in the underlying asset price from
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  • Options Basics: Conclusion | Investopedia

    http://www.investopedia.com/university/options/option5.asp
    ... a specific price on or before a certain date. Options are derivatives
    because they derive their value from an underlying asset. ...

  • Derivatives 101

    http://www.investopedia.com/articles/optioninvestor/10/derivatives-101.asp
    ... Derivatives are types of investments where the investor does not own the underlying
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  • Can I make money using put options when prices are going up?

    http://www.investopedia.com/ask/answers/05/BullPut.asp
    It seems counterintuitive that you would be able to profit from an increase in the
    price of an underlying asset by using a product that is most often. ...

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