BOSTON ( TheStreet) -- Options are the best-known derivative securities, but they're little understood.The Black-Scholes-Merton model is the basis for determining option prices. It's complex and nearly impossible for a casual investor to understand or implement. Option prices are subject to several factors, which have been dubbed "the Greeks" after the Greek symbols that represent the factors. The character theta represents time sensitivity; delta, price of the underlying security sensitivity; vega, volatility sensitivity; and rho, sensitivity to the appropriate interest rate. There's a set of "higher order" Greeks based on the values of the first-order Greeks. Getting into options trading is a good way for a novice investor to lose a lot of money. But that doesn't mean options have no place in a portfolio. The most common options strategies are a covered call, which enables investors to gain income even when the stock price isn't moving, and a protective put, which limits losses. Because the basis of every strategy is a combination of calls and puts, it's important to understand the payoffs. A call option gives the buyer the opportunity to acquire the underlying security at the strike price. Those positions gain in value as the stock price increases because the buyer can exercise the option and purchase the security for less than it's currently trading for. On the other hand, the seller must dump the stock at below the market rate and, therefore, take a loss. The price of the option compensates the seller for taking on the risk of having to sell the security below the market price. The more "out of the money" an option is, the cheaper it will be, and vice-versa. A put option is the opposite of a call option. It gives the buyer the opportunity to sell the underlying security to the seller of the option at the strike price. Therefore, the option gains in value as the share price of the underlying security falls. Combining these securities at various strike prices can lead to a huge number of potential strategies. The long-straddle strategy and butterfly strategy are two that could gain credence in the coming months.