Options are a type of derivative, which means their value is based on an underlying asset. This underlying asset could be a bond, cash, stock, or commodity.
A pledge to exchange a financial asset, such as shares, at a certain price in the future is known as an option. Two parties are required for every options contract.
Calls and puts are the two main types of options. Holding a put provides you the opportunity to sell the underlying asset, whereas owning a call gives you the option (but not the duty) to buy it. You may distinguish between the two by keeping in mind that a call would "call" away an asset, but a put would "place" it to someone else.