>>18115570
In very simplified terms, options are alternatives to actually purchasing stock (although you can also own a stock and purchase an option as insurance).
The name “option” is a clue into what it is; buying an option gives you the option to buy a stock at a particular price (a call) or to sell a stock at a particular price (a put). Again, you don’t actually need to own the stock to do this, it just gives you the option to do so.
For every option purchased, there is a premium; this is the maximum amount you will be able to lose. With that premium paid, you purchase an option that guesses where the stock price will be at a particular expiration date.
You’ll then close the option before the expiration date (unless you’re trying to exercise the option, but that doesn’t really happen too often for this kind of trading) based on when you think is a good time to sell.
TL;DR it’s a bet on whether or not a stock will go up (call) or go down (put)