Many people who know me being an option trading expert approach me with the very same question. They ask what is option trading. Let me therefore explain this and illustrate on a few easy to understand examples. An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date. An option, just like a stock or bond, is a security. It is also a binding contract with strictly defined terms and properties.