An option contract is a financial agreement that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price within a specific time frame. This underlying asset can be stocks, commodities, or other financial instruments. There are two main types of option contracts: call options, which allow the buyer to purchase the asset, and put options, which allow the buyer to sell the asset. Investors use options for various purposes, including hedging against risks or speculating on price movements.