Definition for : Underlying asset

Each Option represents an asset that can either be bought or sold. This asset is called the underlying asset. The underlying asset can be either a financial asset (e.g. a Stock, a Bond, a Treasury Bond, a forward contract, currency, a Stock index, etc.) or a commodity (for example a raw material or mining asset). Underlying asset is in general the asset of any Derivative contract.

(See Chapter 24 Hybrid securities of the Vernimmen)

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