When creating stored procedures and functions, the option that allows you to transfer values to and from the calling environment is:

B. Arguments.

Arguments, also known as parameters, are variables that are defined within a stored procedure or function and can be used to receive values from the calling environment. These values can be passed to the procedure or function when it is executed, and the procedure or function can also return values back to the calling environment using these arguments.

Option A, local variables, are variables defined within the scope of the procedure or function and are not used for transferring values to and from the calling environment.

Option C, boolean variables, are variables that can hold a true or false value and are not specifically designed for transferring values to and from the calling environment.

Option D, substitution variables, are variables used in SQL*Plus and Oracle SQL Developer tools and are not used for passing values to and from the calling environment in stored procedures or functions.

So, the correct answer is B. Arguments.