The value of a stock option is directly dependent on the movement in price of the its underlying security. As an example, the value of IBM options are derived from 100 shares of the underlying IBM stock. Every option will have an underlying security.
Options operate in the form of contracts.
Generally speaking, an options contract represents the right to buy or sell 100 shares of the underlying stock. For example, if you own 1options contract on IBM, your contract represents the right to buy or sell 100 shares of the underlying IBM stock. When you trade options you can own as little as one contract or as many contracts your trading capital will allow. There are no partial contracts in options trading. One of the important things to understand about options is that buying an option contract does not obligate you to sell or purchase actual shares of the underlying stock.