Imagine how the deal was made. A banana lover would come to the banana trader and say – I need you to sell me an option to CALL bananas from the market at $5 a bunch any time by the end of this year. The banana trader would have to WRITE a document saying: ‘I promise you that if by the end of this year you CALL me to deliver bananas to you at $5 a bunch then I will do that’. Now, just after WRITING this document, the bananas trader HOLDS it in their hands. If they decide to sell it to the banana lover then the banana lover will receive the document and HOLD it in their hands. So, think of an option as a document, written contract, between the buyer (HOLDER) and the seller (WRITER). And to buy the contract you have to pay a price for it, called PREMIUM. So, the price of the option itself and the price of the bananas are two separate things. The price of the option contract can be derived from the historical prices of bananas. The option on bananas is a derivative of a simple trade of buying or selling bananas at the current price.