I'm sure you've heard about stock options. There are also options on things like commodities, currencies, etc. But, herein we'll discuss only stock options. A stock option is a right to buy or sell a particular stock at a set price on or before a specified expiration date. After the expiration date the option is of no value or use.
Options have many useful purposes.
Options can be traded just like stocks are traded on a stock exchange. Companies often grant stock options to their senior employees as a way to compensate them for their contribution to the growth of the company. This is a good way to generate additional income by holding a security. Options not shown can still be created or written by investors. Speculators in the market often trade, i.e. buy and sell, options.