Note that the holder is not obligated to buy or sell at the predetermined price, he merely has the option to do so if he wishes to.

Hughes Optioneering

On the other hand, purchasing a PUT option gives the buyer the right to SELL an asset at their chosen strike price. So, if he thinks the market price of an asset will drop below the strike price before the contract expires, he would buy a put option.

So the profit from an option trade is the amount the market has gone beyond the strike price minus the premium at the contract expiration. You are not obligated to exercise the contract and you obviously decide not to buy the land because it has fallen in value. As you can see, options are a great alternative to play your market ideas with very limited risk.

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