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(1) A simple or complex option position that will change in value as if it were a position in the shares of the underlying stock as the price of the underlying stock changes. The option position has risk characteristics similar or identical to the number of shares it imitates. Note that an option position will not behave as a fixed stock equivalent position at all possible prices of the underlying. (2) The share equivalent of a single option position-approximately equal to the instantaneous neutral hedge ratio at the spot price times the contract multiplier. Also called Underlying Equivalent. See also Risk Equivalent Unit (REU), Synthetic Stock, Neutral Hedge Ratio.
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