Options are literally just insurance plans for stocks. Just like car insurance or home insurance. They are called options, because when you get in a car crash

Options are literally just insurance plans for stocks. Just like car insurance or home insurance. They are called options, because when you get in a car crash you have the option of calling your insurer, because you purchased insurance. When your stock crashes, you have the option to call the counter-party to cover the loss. If options were called "insurance contracts", they would still be the same thing, and probably more understandable to the public.