Underlying Market
a.k.a. Underlying, Underlying asset
The actual asset or market a derivative's value is based on.
In plain English
The actual asset or market a derivative's value is based on.
The underlying market is the real thing behind a derivative. A EUR/USD option's underlying is the EUR/USD exchange rate. An oil future's underlying is crude oil. When the underlying moves, the derivative's value moves with it, often magnified.
Knowing what drives the underlying, and how closely your product tracks it, is step one before trading any derivative.
Keep this word for good
Your free Private Swap Lounge saves the terms you’ve learned and quizzes you on them. Portal under construction. Expected delivery date is December 01, 2026.