Options are a type of derivative that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price, known as the strike price. There are two main types of options:

1. Call Option: Gives the holder the right to buy the underlying asset at the strike price.

2. Put Option: Gives the holder the right to sell the underlying asset at the strike price.

Options are often used for various purposes, such as:

1. Hedging: To mitigate potential losses or gains in an existing position.

2. Speculation: To bet on the price movement of an asset.

3. Income generation: To sell options and collect premiums.

4. Spreads: To combine options with different strike prices or expiration dates.

Some key terms to know when dealing with options include:

1. Strike Price: The predetermined price at which the option can be exercised.

2. Expiration Date: The last day on which the option can be exercised.

3. Premium: The price paid by the buyer to acquire the option.

4. Underlying Asset: The security or asset that the option is based on.

5. Holder: The buyer of the option.

6. Writer: The seller of the option.

Remember, options are a versatile financial instrument, but they also come with risks and complexities. It's essential to thoroughly understand options trading before entering into any transactions.