The Collaborative International Dictionary of English v.0.48:

Option \Op"tion\, n. [L. optio; akin to optare to choose, wish,
   optimus best, and perh. to E. apt: cf. F. option.]
   1. The power of choosing; the right of choice or election; an
      alternative.
      [1913 Webster]

            There is an option left to the United States of
            America, whether they will be respectable and
            prosperous, or contemptible and miserable, as a
            nation.                               --Washington.
      [1913 Webster]

   2. The exercise of the power of choice; choice.
      [1913 Webster]

            Transplantation must proceed from the option of the
            people, else it sounds like an exile. --Bacon.
      [1913 Webster]

   3. A wishing; a wish. [Obs.] --Bp. Hall.
      [1913 Webster]

   4. (Ch. of Eng.) A right formerly belonging to an archbishop
      to select any one dignity or benefice in the gift of a
      suffragan bishop consecrated or confirmed by him, for
      bestowal by himself when next vacant; -- annulled by
      Parliament in 1845.
      [1913 Webster]

   5. (Stock Exchange) A stipulated privilege, given to a party
      in a time contract, of demanding its fulfillment on any
      day within a specified limit; also, the contract giving
      that privelege; as, an option to buy a stock at a given
      price; to exercise an option.
      [1913 Webster +PJC]

   Note: A person owning a stock may sell to another person an
         option or right to buy that stock at some specified
         price within a specified period of time, and in return
         will get a premium in consideration for giving the
         option. If the option price (the strike price) is above
         the market value for the entire period in which the
         option is valid, the option is typically not exercised,
         and expires with no need on the part of the stock owner
         to transfer the actual stock itself. If however the
         stock price rises above the option price, the holder of
         the option may exercise the option, and buy the stock
         at the specificed price, and may in turn resell the
         stock at the current market value, perhaps making a net
         profit on the transaction. The original holder of the
         stock will receive, in addition to the price at which
         the stock is sold, the price of the option, and will
         generally receive more money than if the stock itself
         were sold at the time that the option was sold. The
         actual profits for the transaction will depend on the
         fees that brokers charge for conducting the sales of
         options and stocks.
         [PJC]

   Buyer's option, an option allowed to one who contracts to
      buy stocks at a certain future date and at a certain
      price, to demand the delivery of the stock (giving one
      day's notice) at any previous time at the market price.

   Seller's option, an option allowed to one who contracts to
      deliver stock art a certain price on a certain future
      date, to deliver it (giving one day's notice) at any
      previous time at the market price. Such options are
      privileges for which a consideration is paid.

   Local option. See under Local.
      [1913 Webster]

   Syn: Choice; preference; selection.

   Usage: Option, Choice. Choice is an act of choosing;
          option often means liberty to choose, and implies
          freedom from constraint in the act of choosing.
          [1913 Webster]

The Collaborative International Dictionary of English v.0.48:

Local \Lo"cal\ (l[=o]"kal), a. [L. localis, fr. locus place: cf.
   F. local. See Lieu, Locus.]
   Of or pertaining to a particular place, or to a definite
   region or portion of space; restricted to one place or
   region; as, a local custom.
   [1913 Webster]

         Gives to airy nothing
         A local habitation and a name.           --Shak.
   [1913 Webster]

   Local actions (Law), actions such as must be brought in a
      particular county, where the cause arises; --
      distinguished from transitory actions.

   Local affection (Med.), a disease or ailment confined to a
      particular part or organ, and not directly affecting the
      system.

   Local attraction (Magnetism), an attraction near a compass,
      causing its needle to deviate from its proper direction,
      especially on shipboard.

   Local battery (Teleg.), the battery which actuates the
      recording instruments of a telegraphic station, as
      distinguished from the battery furnishing a current for
      the line.

   Local circuit (Teleg.), the circuit of the local battery.


   Local color.
   (a) (Paint.) The color which belongs to an object, and is not
       caused by accidental influences, as of reflection,
       shadow, etc.
   (b) (Literature) Peculiarities of the place and its
       inhabitants where the scene of an action or story is
       laid.

   Local option, the right or obligation of determining by
      popular vote within certain districts, as in each county,
      city, or town, whether the sale of alcoholic beverages
      within the district shall be allowed.
      [1913 Webster]

WordNet (r) 3.0 (2006):

local option
    n 1: freedom of a local government to determine by popular vote
         the applicability of a controversial law in their
         jurisdiction