Underlying instrument
An underlying instrument is the financial instrument upon which the price of derivative is derived from. |
Similar financial terms
Underlying securityFor options it is the security subject to being purchased or sold upon exercise of an option contract. For example, Deutsche Bank stock is the underlying security to Deutsche Bank options.
For depository receipts it is the class, series and number of the foreign shares represented by the depository receipt.
Underlying
The "something" that the parties agree to exchange in a derivative contract.
Underlying Commodity
The commodity or futures contract on which a commodity option is based, and which must be accepted or delivered if the option is exercised. Also, the cash commodity underlying a futures contract.
Alternative mortgage instruments
Variations of mortgage instruments such as adjustable-rate and variablerate mortgages, graduated-payment mortgages, reverse-annuity mortgages, and several seldom-used variations.
Limited-liability instrument
A security, such as a call option, in which the owner can only lose his initial investment.
