Underlying Option Security

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Dictionary Says

Definition of 'Underlying Option Security'


An underlying option security is the financial instrument on which a derivative's (i.e., an option's) value is based – it provides the price that is used to determine the value of the derivative. An option is classified as a derivative because its value is derived from the underlying security.
Investopedia Says

Investopedia explains 'Underlying Option Security'


An option holder has the right, but not the obligation, to buy or sell a particular instrument at a specified price and date in the future.
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