By Investopedia Staff. An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date. An option, just like a stock or bond, is a security.he two types of options are calls and puts: 1  A call gives the holder the right to buy an asset at a certain price within a specific period of time. 2  A put gives the holder the right to sell an asset at a certain price within a specific period of time.