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Uncovered put
A short put option position in which the writer does not have a corresponding short stock position or has not deposited, in a cash account, cash or cash equivalents equal to the exercise value of the put. The writer has pledged to buy the asset at a certain price if the buyer of the option chooses to exercise it. Uncovered put options limit the writer's risk to the value of the stock (adjusted for premium received.) Also called "naked" puts.
Uncovered Put writing
A short put option position in which the writer does not have a corresponding short position in the underlying security or has not deposited, in a cash account,
Under the belt
Long position in a stock.
Underbanked
When an originating investment_bank cannot find enough firms to underwrite a new issue.
Underbooked
Describes limited interest by prospective buyers in a new issue of a security during the preoffering registration period.
Undercapitalized
A business has insufficient capital to carry out its normal functions.
Underfunded pension plan
A pension plan that has a negative surplus (i.e., liabilities exceed assets).
Underinvestment problem
The mirror image of the asset substitution problem, in that stockholders refuse to invest in low-risk assets to avoid shifting wealth from themselves to debtholders.
Underlying
What supports the security or instrument that parties agree to exchange in a derivative contract.
Underlying asset
The security or property or loan agreement that an option gives the option holder the right to buy or to sell.
Underlying debt
Municipal bonds issued by government entities but under the control of larger government entities and for which the larger entity shares the credit responsibility.
Underlying futures contract
A futures contract that supports an option on that future, which is executed if the option is exercised .
Underlying security
For options, the security that is subject to purchase or sold upon exercise of an option contract. For example, IBM stock is the underlying security for IBM options. For Depository receipts, the class, series, and number of the foreign shares represented by the depository receipt.
Undermargined account
A margin account that no longer meets minimum maintenance requirements, requiring a margin call on the investor.
Underperform
In general, this means to do worse than some particular benchmark. Mutual Fund XYZ is said to underperform the S&P500 if its return falls short of the S&P500 return. However, this language does not take risk into account. That is, one might have a lower return than the benchmark in a particular year because of lower risk exposure. Underperform is also a term used by analysts to describe the prospects of a particular company. Usually, this means that the company will do worse than its industry average. Related: outperform.
Underpricing
Issuing securities at less than their market value.
Undervalued
A stock price perceived to be too low or cheap, as indicated by a particular valuation model. For instance, some might consider a particular company's stock price cheap if the company's price-earnings ratio is much lower than the industry average. To refer to undervaluation or overvaluation implicitly assumes some model of valuation. It is always possible that the security is valued correctly and that model applied is wrong.
Undervalued security
A security selling below its market value or liquidation value.
Underweight
Usually refers to recommendation that leads an investor to reduce their investment in a particular security or asset class. The reduction is usually with respect to a benchmark. Suppose that U.S. equities compose 40% of the benchmark portfolio. If one thinks the U.S. will underperform, the investor may reduce the exposure to U.S. equity to less than 40%.
Underwithholding
When a taxpayer has withheld too little tax from salary and will therefore owe tax when filing a return.
Underwrite
To guarantee, as to guarantee the issuer of securities a specified price by entering into a purchase and sale agreement. To bring securities to market.
Underwriter
A firm, usually an investment bank, that buys an issue of securities from a company and resells it to investors. In general, a party that guarantees the proceeds to the firm from a security sale, thereby in effect taking ownership of the securities.
Underwriter's discount
See Also: Gross spread
Underwriting
Acting as the underwriter in the issue of new securities for a firm.
Underwriting agreement
The contract between a corporation issuing new publicly offered securities and the managing underwriter as agent for the underwriting group. Compare to agreement among underwriters.
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