I've been spending some time trying to figure out what obscure terms of trading mean, and it's a nightmare.

But it's doable.

Lately I've been focusing on understanding what the heck an option is.

An option is a financial instrument that's valued based on the underlying security, for example stocks, bonds, commodities or foreign currency.

When you transact the option, the underlying asset follows suit.

Obviously, all of that is included in the contract.

Usually, within the option contract, you'll find the underlying asset, ie XY number of XY stock, the so-called 'strike price', ie the price at which the option is executed.

You also have an expiry date, and the premium, ie the amount you pay for the option.

It's kinda like ordering a burger knowing you automatically also get a beer.

Sort of.

No, sorry.

Bad example.