Not quite money for nothing One of the advantages to trading options is that it allows speculation on the movement of a stock without having to spring for the stock itself. If you think Company ABC is a winner you might buy 100 shares of the stock. But for a lot less money, you could simply buy the option. Your hope is that ABC rises within that time frame so that you can sell your option to someone else for more than you originally paid. Buy 10 contracts instead of one, and you made a grand.
Same concept applies to puts.
If you thought ABC was headed south, you'd buy a put. The further the stock falls, the more valuable your right to sell it at a certain price. IBM stays right where it is and the option expires worthless. You lose your premium, but that's it. Leave option selling to the experts.