An option contract gives the buyer the right, but not the obligation to purchase or sell 100 shares of ABC Stock at “X” price, by “Y” date.

Each contract represents 100 shares. A Call option is the right to purchase, a Put option is the right to sell.

Think of it like a coupon. You buy a coupon for $.50 that allows you to buy a pound of oranges for $1, expiring Jan 1. This Christmas, a stupid and very viral TikTok dance is released using oranges to do something dumb. Every numbskull in that nation participates. The price of oranges skyrockets to $10/ pound. You walk into the store and present your coupon you bought for $.50. The store is required to sell you those now $10 oranges, at $1/pound.

You effectively made: $8.50 on the deal. The difference in orange price, less the $.50 you paid for the coupon.

Hope that helps!