These are the steps you can follow to create simple products in magento with custom options them

1.  Login to Admin menu, go to Catalog -> Manage Products.

2 In the upper-right corner of the Manage Products page, click the Add Product button.

3. In the Create Product Settings section, do the following:
    a. Accept the “default” Attribute Set
    b. Set Product Type to “Simple” and click the Continue button.

Complete the Basic Information

4. In the Product Information panel on the left side, select General. Then, complete the required fields as follows:

    a. Enter the product Name as you want it to appear in all catalog listings.
    b. In the Description box, enter the main description that will appear on the Product Detail page.
    c. Enter a Short Description of the product.
    d. Assign a unique SKU for the product.
    e. Enter the Weight of the product.
    f. Set Status to “Enabled.”
    g. Set Visibility to “Catalog, Search.”

5. In the Product Information panel on the left side, select Prices. Then, complete the required fields as follows:

    a. Enter the Price that you will charge for the product.
    b. Set Tax Class to None.

6. Select the Image tab from the left side Under Product Information panel and click on the browse file button to select the required product images from the system. we can select multiple images at one time. then click on the Upload File button.

7. Select the inventory tab from the left side & set Qty according to your product & set Stock Availability "In Stock" from the deop down menu.

8.  In the Product Information panel, select Websites. On the Websites tab, select the checkbox

9. To be visible in your catalog, the product must be assigned to a category. To assign the product to a category, do the following:

    a. In the Product Information panel, select Categories.
    b. Select the checkbox of any category in which you want the product to appear.

10. In the Product Information panel on the left side, Select "Custom Options".

     a) Now, Click on Add New Options.
    b) Set the Title for your options.(for color options Set the title to color only)
    c) Select the Input type as drop down from the select box for your color title.
    d) Set "Is Required" to Yes.
    e) Now in the below panel click on "Add New Row" button.
    f) Afterwards a set of fields in a row will get appeared, that are for the sub options of the color.
    g) fill the title, Price, Price Type, Sku, set order as per your requirment.

    same way add more options.

11. After completing these steps, click the Save and Continue button.