What is An Underlying Asset - Options Trading

Underlying Assets are basically main assets which has a certain value.

For Example suppose an apple is an underlying asset, which has a certain value. Now suppose you can make juice out of this apple, so this juice will act as a derivative because it has been derived from its underlying / main asset which is The Apple.

Similarly in Stock Market: Stock of a company is Underlying Assets and the value of Future & Options are derived from this asset, thats why they are called derivative of this Stock Option.

General Example of Underlying Assets in Stock Market are:
Stock
Index
Commodity
Currency

The common derivative of these underlying assets are - Future & Options.

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