When you buy an option: you are buying the RIGHT not the OBLIGATION to purchase the shares at a certain price, by a certain date:

Let me give you a quick example:

Lets say you have a house for sale and you am asking 100 Thousand dollars. I am interested in buying, but I am speculating that in the next 6 months, the property values are going to increase.

I come to you and say: Hi, I would like to buy your house but I would like to purchase the OPTION (the right) to buy the house. You say: Umm. Ok, I guess, what do you mean:

I say: I'll give you 5 thousand dollars CASH. The cash is yours to keep forever- BUT you MUST (obligated) to sell me the house for 100K between now and say, 6 months from now. If I dont buy the house you keep the 5K. If I do buy the house you keep the 5K plus the 100K I give you for it.

4 months goes by and properties increase 20 percent in value. Your house will now sell for 120K. You cant sell it!! You have a CONTRACT where YOU are OBLIGATED to sell me the house for 100K.

I give you the 100K and buy your house. You made the 100K you wanted, and the 5K for WRITING the option.