They have an insurance element. They have additional uses when compared to terminal instruments. However options have an upfront premium that must be paid. The advantage with options is that they set a floor to the potential losses, and the option holder has the option of allowing the contract to lapse. The terminal instrument contract must be settled.
Duration is a measure of interest-rate risk of financial assets and liabilities.
At its simplest it is the weighted average maturity of the cash flows, where the weights are given by the present value of the cash flows. It is a measure of the value sensitivity os a set of cash flows to changes in the discount rate used to value the asset. This is the coupon effect. Modified duration is Macaulay's duration modified to reflect the discrete compounding intervals. With modified duration, the longer the maturity of the cash flows, the greater the price volatility, since the modified duration will be higher.