Underlying

The stock, ETF or index an option is based on — its price is what the option ultimately tracks.

The underlying is the asset your option is built on, most often a stock, an ETF or an index. When you buy a call on Apple, Apple shares are the underlying, and the option's value moves because the underlying moves. Everything else about the contract, from strike to expiry, only matters in relation to where that underlying price sits.

In practice you watch the underlying first and the option second. A standard equity option controls 100 shares, so one AAPL contract gives you exposure to 100 Apple shares. If the underlying trades at 190 and you hold a 200 strike call, you already know the option is out of the money and needs a real move up to gain intrinsic value.

A common mistake is treating the option in isolation and forgetting that dividends, earnings dates and gaps happen at the underlying level. An overnight gap in the stock can change your position long before you get a chance to react, which is why traders check what the underlying is doing around scheduled events.

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All options terms

Call Put Strike price Premium Expiration In the money (ITM)At the money (ATM)Out of the money (OTM)Intrinsic value Time value (extrinsic)Delta Gamma Theta Vega Implied volatility (IV)Open interest Assignment Exercise Spread Break-even Probability of profit (POP)Assignment risk / early assignment LEAPS Naked (uncovered) option Rho Historical volatility (HV)Volume Bid-ask spread Moneyness Covered call Cash-secured put Vertical spread Iron condor Straddle Strangle Rolling Margin Max pain American-style option European-style option Contract multiplier Debit vs credit Volatility skew The Greeks Hedge Leverage Expected move Notional value Protective put Collar Butterfly spread Iron butterfly Calendar spread Diagonal spread Credit spread Debit spread Bull call spread Bear put spread Ratio spread Synthetic position The wheel strategy Poor man’s covered call (PMCC)Box spread Put-call parity Pin risk IV crush IV rank / IV percentile Ex-dividend date Deep in the money Weeklys 0DTE (zero days to expiration)Order types (to open / to close)Buying power reduction Cash settlement Market maker Slippage Mid price Black-Scholes model

Educational use only. Quotes are delayed ~15 minutes and nothing here is financial advice. Options trading involves substantial risk of loss.