Underlying vs. Overlying — What's the Difference?

In finance, the underlying of a derivative is an asset, basket of assets, index, or even another derivative, such that the cash flows of the (former) derivative depend on the value of this underlying. There must be an independent way to observe this value to avoid conflicts of interest.

To lie over or on.

Lying under or beneath something

To suffocate (a baby, for example) by accidentally lying on top of it.

Basic; fundamental

Lying over or upon something else

Present but not readily noticeable

Lying over or upon something; as, overlying rocks.

Taking precedence; prior

Placed on or over something else;

Lying underneath

Basic or fundamental

Implicit

(finance) The entity from whose performance a derivative derives its value.

Present participle of underlie

Lying under or beneath; as, the underlying strata of a locality.

Fundamental; basic; as, underlying principles; underlying causes.

Implicit; not immediately obvious; requiring careful scrutiny to discover; as, the underlying sarcasm in her seemingly innocuous remark..

In the nature of something though not readily apparent;

Located beneath or below

Being or involving basic facts or principles;