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Underlying Option Security

What is 'Underlying Option Security'

An underlying option security is the financial instrument on which a derivative's (i.e., an option's) value is based – it provides the price that is used to determine the value of the derivative. An option is classified as a derivative because its value is derived from the underlying security.

Explaining 'Underlying Option Security'

An option holder has the right, but not the obligation, to buy or sell a particular instrument at a specified price and date in the future.


Further Reading


Approximate option valuation for arbitrary stochastic processes
www.sciencedirect.com [PDF]
… For organized exchanges, this would correspond to an American call option whose underlying stock has no dividend payments over the life of the option. The above approach could easily be generalized to include constant dividend yields for European options or American …

The impact of option introduction on the conditional return distribution of underlying securitiesThe impact of option introduction on the conditional return distribution of underlying securities
onlinelibrary.wiley.com [PDF]
… For organized exchanges, this would correspond to an American call option whose underlying stock has no dividend payments over the life of the option. The above approach could easily be generalized to include constant dividend yields for European options or American …

Call options and the risk of underlying securitiesCall options and the risk of underlying securities
www.sciencedirect.com [PDF]
… For organized exchanges, this would correspond to an American call option whose underlying stock has no dividend payments over the life of the option. The above approach could easily be generalized to include constant dividend yields for European options or American …

Option pricing when underlying stock returns are discontinuousOption pricing when underlying stock returns are discontinuous
www.sciencedirect.com [PDF]
… For organized exchanges, this would correspond to an American call option whose underlying stock has no dividend payments over the life of the option. The above approach could easily be generalized to include constant dividend yields for European options or American …

An empirical reexamination of the impact of CBOE option initiation on the volatility and trading volume of the underlying equities: 1973–1986An empirical reexamination of the impact of CBOE option initiation on the volatility and trading volume of the underlying equities: 1973–1986
onlinelibrary.wiley.com [PDF]
… For organized exchanges, this would correspond to an American call option whose underlying stock has no dividend payments over the life of the option. The above approach could easily be generalized to include constant dividend yields for European options or American …

Spanning and derivative-security valuationSpanning and derivative-security valuation
www.sciencedirect.com [PDF]
… For organized exchanges, this would correspond to an American call option whose underlying stock has no dividend payments over the life of the option. The above approach could easily be generalized to include constant dividend yields for European options or American …

Option initiation and underlying market behavior: Evidence from NorwayOption initiation and underlying market behavior: Evidence from Norway
search.proquest.com [PDF]
… For organized exchanges, this would correspond to an American call option whose underlying stock has no dividend payments over the life of the option. The above approach could easily be generalized to include constant dividend yields for European options or American …

The pricing of index options when the underlying assets all follow a lognormal diffusionThe pricing of index options when the underlying assets all follow a lognormal diffusion
papers.ssrn.com [PDF]
… For organized exchanges, this would correspond to an American call option whose underlying stock has no dividend payments over the life of the option. The above approach could easily be generalized to include constant dividend yields for European options or American …

Modifying the Black-Scholes option pricing model for alternative underlying instrumentsModifying the Black-Scholes option pricing model for alternative underlying instruments
www.tandfonline.com [PDF]
… For organized exchanges, this would correspond to an American call option whose underlying stock has no dividend payments over the life of the option. The above approach could easily be generalized to include constant dividend yields for European options or American …


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