Underlying Asset

The underlying asset is the stock, ETF, index, or other financial instrument that an options contract is based on. When traders buy or sell an option, they’re speculating on the future movement of the underlying asset. For example, a call option on Apple ($AAPL) gives the holder the right to buy AAPL shares at the strike price. The underlying asset's price movement is the primary factor affecting an option’s value. Below, we have an image of the contract summary an option contract; the $AAPL $235C 03/28/2025. The Apple ($AAPL) stock would be considered the underlying asset in this case: the stock or asset, and its price, that the option contract is tied to.