The Right But Not the Obligation
Choice is the main feature of an option. Buying a livestock option provides the right, but not the obligation, to take a long or short position in a specific futures contract at a fixed price on or before an expiration date. The right granted by the option contract is purchased from the option seller and called the premium. The option seller, or writer, keeps the premium whether the option is used or not. The seller must fulfill the contract terms if the buyer exercises the option.
Buying an option means buying a choice. The buyer can choose to let the option expire without a commitment or delivery obligation. This is not an alternative with most cash or agricultural futures contracts.
Details: How Options Work