underlying stock

(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.

underlying stock by Abu Yahya April 5, 2010

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