Gives you the right to purchase / sell a currency at a certain price (from now, up till an expiration date). You have the right to purchase (or sell), but you dont have to. On the other hand, the other party to this "options" contract is required to buy (or sell) if you ask them to. These "options" can be bought and sold in a market (much like the "futures" can).
Calls and Puts will be listed with many different "strike prices". When you see a pricing table, you will see many different rates depending on which "strike price" you are interested in.
Example: Using options to hedge an Account Payable (A/P) due in 6 months. If there is a supplier in a foreign country (say in Europe) that you need to pay in 6 months, you might be afraid that the Euro might appreciate, making your dollar-based payment higher. So, to hedge this risk, you could purchase CALL option contracts in order to lock in the rate in the future.
Strike price of 1440 = $1.44 per euro that you want to lock in.
Then, if it gives you a price of 1.85 for December...that means the PREMIUM is $0.0185 per euro....
Options = 1/2 the size of Futurs
Example: Euro/ dollar futures are 125,000 euros per contract
Then, Euro/ Dollar options are 62,500 euros per contract