Types of Options

Real option (real option) is a choice that an investor has when investing in the real economy (i.e. in the production of goods or services, rather than in financial contracts). This option may be something as simple as the opportunity to expand production, or to change production inputs. Real options are an increasingly influential tool in corporate finance. They are typically difficult or impossible to trade, and lack the liquidity of exchange-traded options.

Traded options (also called "Exchange-Traded Options" or "Listed Options") is a class of Exchange traded derivatives. As for other classes of exchange traded derivatives, trade options have standardized contracts, quick systematic pricing, and are settled through a clearing house (ensuring fulfillment). Trade options include
stock options, discussed below,
commodity options,
bond options,
interest rate options
index (equity) options,
currency cross rate options, and
swaption.

Vanilla options are 'simple', well understood, and traded options; Exotic options are more complex, or less easily understood. Asian options, lookback options, barrier options are considered to be exotic, especially if the underlying instrument is more complex than simple equity or debt.

Employee stock options (employee stock option) are issued by a company to its employees as compensation.