Ask a Fool: How Do Options Work?
The basic idea behind options is quite simple. There are two main types of options: call options and put options.
Call options give you the right, but not the obligation, to buy a stock at a predetermined price, known as the strike price, at any point before a specified expiration date. Put options give you the right, but not the obligation, to sell a stock at a certain price before a specified date.
Options contracts are typically sold in increments of 100 shares, although there are exceptions.
Source Fool.com
