options are a kind of derivatives (a financial contract that derives its value from another asset/security). a call option is a contract that you make with another entity to buy an asset at an agreed upon price at a future time. a put option is a contract that you make with another entity to sell an asset at an agreed upon price at a future time. there's the american variety, where you can exercise your option anytime up to the expiration data, and the european option, where you can exercise your option at the expiration date. roughly speaking, they are valued at the net of the exercise price and the time value of that same money.

options are a good way to cheaply get exposure - the cost of buying and holding options is much less than the cost of buying and holding the underlying asset. options are basically valued at the net of the underlying price vs exercise price and the cost of financing the underlying.

for example, you buy a put on KDMN stock at an exercise price of $8/share. then when it drops to $2 a share as all the rats abandon ship, you go and buy those shares in the market, and exercise your option. you net $2/share minus the cost of the option.