The two basic ways of trading options are by the use of “calls” and “puts”
Think of a Call option as a stock that you “buy” expecting the price to rise in the near future. When you purchase a call option contract you are getting the right to buy the asset at the strike price (a predetermined price) before the expiration of the option. But you are not “obligated” to buy the asset and you can let the options contract expire. If you do let it expire you will lose the money you spent buying the contract.
When the market price goes above the strike price, you are said to be ‘in the money’ because you would be able to profit if you were to sell the option contract immediately. However, if the market price is below the strike price, you are said to be ‘out of the money’.
A Put option is a contract you have the right to “sell” at a predetermined price before the expiration date. It’s similar to shorting a stock. You are expecting this option to go down in value before expiration. So in this case if the market price goes below the strike price then you are ‘in the money’ otherwise you are said to be ‘out of the money’.
Trading options is a little more complicated than trading stocks and it’s more risky. Unlike stock that you can hold and wait for a while options put time pressure on you. You must do your research on options, study the underlying asset, the volatility and other factors that affect its value.
There are other more advanced options trading strategies but calls and puts are where you will start if you are new to trading options.