| 1. | underlying stock | ||
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(FINANCE) a stock whose price movements determine the value of a financial derivative. For example, when a hedge fund manager writes a call option for Citigroup (NYSE:C) at 4.25/share, C is the underlying stock. "Underlying" can be used to refer to other things besides stocks; for example, commodities, currencies, or bonds. A put option rises when the spot price of its underlying stock declines.
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