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What is a future option? well, the beginning goes back to the farmers and when we could not predict the weather patterns (if you think the weather men/women are bad now imagine how bad it was couple of hundred years ago).  So one day some smart farmer figured if he could sell his crop before he actually plant the stuff and get paid for it (or a portion of it) that would be very helpful. He would guarantee some income and reduce his risk if things did not work out.
If things worked out and his harvest was good then he could deliver his crop and all was good. Then the person who prepaid him could get his promised deliverables and do whatever he was planning to do, may be sell it at the local groceries at a higher price and make a some gain. Now remember, if the harvest was better than what the farmer thought he would lose some of his potential gains because he sold them for less than what he thought he would have - we will come back to this later, it is a component of risk.
Now if thing did not work out and the farmer's crop was not as good, he would come ahead (hopefully we negotiated a decent price). The person taking of the delivery of the goods would potentially lose some money because he did not get what he thought. All is not lost in this transaction though; if there was a big drought and all the other farmers had a problem with their crop then the price of what ever was being sold could go up because less of it is available. The transaction described here is called futures options. There are many variations of it out there but the basic premise is the same. Someone promise to deliver something at a future date at a particular price. Since no one knows the future (in this case weather, but in case of stocks and bonds that is called inside trading and it is illegal) then there is risk involved! If you know how to balance this risk, may be there is money to be made.
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