What are options?

According to Optiontradingpedia.com,

"A stock option is a contract that gives the buyer the "right" or "power", but not the "obligation", to exercise the contract on or before a fixed future date (the exercise date or expiration) to trade the underlying stock at an agreed price."

Essentially, it is a trading instrument that gives you leverage if used purely for speculation and protection if used as a hedge. The various options strategies that can be made using options also gives traders a precise mean of trading almost every outlook on a stock.