Options are used in both stocks and realestate. The name tells us exactly what it is without describing it. You simply have an option to buy or sell an asset at a pre-determined price and up to a pre-determined date. Here's a realestate example because it's a more tangible asset that we can easily wrap our head around: You own a piece of raw land you want to sell for $50k and I am a builder. I am considering buying your land and building on it but I want to make sure I do my due diligence prior to forking over the entire $50k for it. You could put it under contract with me for 90 days while I do my due diligence but it locks up the property so you can't sell it to anyone else. I could walk away at day 89 and you just lost out on 3 months of opportunity cost to sell the land to someone else. Alternatively you could SELL me an option. For $5k you give me the right to purchase this property for $50k any time between now and 90 days from now. On day 91 I no longer have the option, my option will expire worthless. What's the benefit to this? You receive a non-refundable $5k for locking up your property with me, I receive the ability to do my necessary due diligence and save myself $45k if the land ends up not being what I'm looking for. Hopefully this helps.