The paper offers a general overview of options within the definition of financial derivatives. The manner of concluding an options contract, its legal characteristics and nature are presented in the light of the Croatian substantive law. In the overview of the types of options, the author analyzes the options prescribed by or incorporated into Croatian laws (e.g. Company Act, Takeover Act, Capital Market Act). After a general presentation and analysis of the ISDA documentation for derivatives, the history, overview and main legal issues related to the Croatian Master Agreement for financial derivatives developed within the Croatian Banking Association and ACI Croatia are elaborated. The analysis conducted in this paper demonstrates that the basic legal institutes on which the ISDA Master Agreement is based are also provided in Croatian law or in applicable EU law. All this leads the author to the conclusion that the Local Framework Agreement for Transactions with Financial Derivatives provides a reasonable tool in terms of significant reduction of legal risks and enables reasonable management of other risks to which contractors are exposed when concluding transactions with derivatives.