What is "Underlying" value or price?

Question

What is "Underlying" value or price?

Answer 1

A derivative security, such as an futures contract or an options contract, derives its value from the price of something else, known as the underlying.

For example, an option contract to buy GE stock for $40 per share has no value unless GE stock is over $40 per share prior to the expiration of the option. For that option the underlying is GE stock which, in turn, makes the value of the underlying equal to the price at which GE stock is trading.