How do you explain options to people who have never heard of them? THe other day someone asked me if I was worried about a market crash again? I explained to them I do worry about that and thats why I choose solid compnaies and less risky ones and that I trade in options and use those options to insure any losses. THe I explained options are like small insurance policies that are tradable and whose value goes up and down and their values are based on several factors. They were still confused!