underlying or underlier
An option or a future is a right or a commitment to buy or sell something at a future date. The underlying is the financial instrument that may or must be bought or sold in each option or futures contract. FAS 133, as amended by FAS 149, defines an underlying to be a specified interest rate, security price, commodity price, foreign exchange rate, index of prices or rates, or other variable (including the occurrence or nonoccurrence of a specified event such as a scheduled payment under a contract). An underlying may be a price or rate of an asset or liability but not the asset or liability itself. American Banker Glossary
What supports the security or instrument that parties agree to exchange in a derivative contract. Bloomberg Financial Dictionary
The stock, commodity, futures contract, or cash index against which a futures or options contract is valued. Chicago Mercantile Exchange Glossary
underlying - covered warrant
The asset on which the covered warrant is based and derives its value. The underlying may be a security (such as shares), a share index ( e.g. FTSE 100), a commodity or a currency. Some warrants are based on a 'basket' of underlyings, which gives an investor exposure to the performance of more than one security for example. London Stock Exchange Glossary
Financial instrument that underlies an option, future, warrant or other instrument. NYSE Euronext Glossary

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underlying un‧der‧ly‧ing [ˌʌndəˈlaɪ-ɪŋ◂ ǁ -ər-] adjective
1. underlying figure/​rate ECONOMICS a rate or figure that shows the real level of inflation, earnings etc although it is not immediately obvious:

• The underlying rate of interest went up last month.

— compare headline
2. underlying security/​share etc FINANCE the investment to which a derivative such as an option (= the right to buy or sell particular shares etc during a particular period of time) relates:

• If the warrant is held for its full 18-month life, the value of the underlying shares would have to rise at least 18.6% to make it profitable for holders.

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   Used in derivative markets to describe the financial instrument or physical commodity on which a futures or options contract is based.
   ► See also Derivatives.

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underlying UK US /ˌʌndəˈlaɪɪŋ/ adjective [before noun]
FINANCE, STOCK MARKET used to describe the shares, etc. to which something such as an option (= the right to buy or sell something in the future) relates: »

The option was sold requiring payment against delivery of the underlying security.

ACCOUNTING, FINANCE used to describe the basic level or amount of something before anything else is added or taken away: »

Underlying conditions are favourable.


They underestimated their underlying costs and ended up losing a lot of money.


Last year the company had underlying earnings of $10.6m on $34m sales.

Financial and business terms. 2012.

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Look at other dictionaries:

  • underlying — un der*ly ing, a. 1. Lying under or beneath; as, the underlying strata of a locality. [1913 Webster] 2. Hence: Fundamental; basic; as, underlying principles; underlying causes. [1913 Webster +PJC] 3. Implicit; not immediately obvious; requiring… …   The Collaborative International Dictionary of English

  • underlying — I adjective based on, basic, built on, deep rooted, elemental, elementary, essential, fundamental, latent, not evident, obscure, original, primal, primary, rudimentary, supporting, undermost, unseen associated concepts: underlying contract,… …   Law dictionary

  • underlying — [un′dərlī΄iŋ] adj. 1. lying under; placed beneath 2. fundamental; basic [the underlying cause] 3. really there but not easily seen or noticed [an underlying trend] 4. Finance having priority, as a claim …   English World dictionary

  • underlying — adjective be the cause or basis of. → underlie underlying present participle of underlie …   English new terms dictionary

  • Underlying —   [ ʌndəlaɪiȖ, englisch], Basiswert, Optionsgeschäft …   Universal-Lexikon

  • underlying — basic, *fundamental, basal, radical Analogous words: *essential, cardinal, vital, fundamental: requisite, indispensable, necessary, *needful …   New Dictionary of Synonyms

  • underlying — [adj] fundamental, latent basal, basic, bottom, bottom line*, cardinal, concealed, critical, crucial, elemental, elementary, essential, hidden, indispensable, intrinsic, lurking, necessary, needful, nitty gritty*, nub, primary, prime, primitive,… …   New thesaurus

  • Underlying — The something that the parties agree to exchange in a derivative contract. The New York Times Financial Glossary * * * underlying un‧der‧ly‧ing [ˌʌndəˈlaɪ ɪŋ◂ ǁ ər ] adjective 1. underlying figure/​rate ECONOMICS a rate or figure that shows the… …   Financial and business terms

  • Underlying — In finance, the underlying of a derivative is an asset, basket of assets, index, or even another derivative, such that the cash flows of the (former) derivative depend on the value of this underlying. There must be an independent way to observe… …   Wikipedia

  • underlying — un|der|ly|ing [ ,ʌndər laııŋ ] adjective only before noun ** 1. ) underlying causes, facts, ideas, etc. are the real or basic ones, although they are not obvious or directly stated: The underlying causes of the riots have been ignored. While… …   Usage of the words and phrases in modern English

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