Options contracts can be implemented as trust-minimized smart contracts using Bitcoin script. These contracts don't require oracles feeding the price into the blockchain or any other trusted third party. Recipients will only trust miners to mine (and not reverse) transactions paying a reasonable feerate, securing their payouts.
The underlier of these derivatives can be any digital asset available on a blockchain that can do HLTCs.
The buyer of an American-style call binary option pays a premium (eg: 0.1 BTC) for
<seller secret> wich gives the right to buy
Q units (quantity) of the underlying asset (100 LTC) at a specified
strike price (0.016 BTC per LTC) at any time until the expiration date.