The specific stock on which an option contract is based is commonly referred to as the underlying security. Options are categorized as derivative securities because their value is derived in part from the value and characteristics of the underlying security. A stock option contract's unit of trade is the number of shares of underlying stock which are represented by that option. Generally speaking, stock options have a unit of trade of 100 shares. This means that one option contract represents the right to buy or sell 100 shares of the underlying security
