Options & derivatives
Underlying
The underlying is the asset (stock, index, currency, commodity) on which a derivative's value is based.
The underlying is the asset (stock, index, currency, commodity) on which a derivative's value is based.
An option, CFD or future has no value of its own: it derives its price from the underlying. Understanding how the underlying behaves is therefore essential before trading any derivative.
The underlying of an Apple call is the Apple stock: its price is what moves the call.
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