Underlying Option Security

See: Covered Call. See: Uncovered Call. See: Strike Price.

An option (put or call) has an underlying thing that it's pegged upon. Lots of options on Disney trade all the time. Options or futures on oil and wheat and pork bellies trade, too. Options are just derived from those underlying things of value. They're "synthetically engineered," in that the options themselves carry no real value; they're just a derivative of something else whose value changes all the time. Like your BFF's moods. Cool idea if you could buy and sell options on 'em.