Let's take another angle and say you're a property developer and you have 100 properties to sell by the end of the year(in 4 months), each going for $100k totaling $10M, by the time they're finished.

However, you're afraid property prices will drop by the time construction is finished on your units, so you go to an insurance company to save your investment and guarantee some sort of profit.

The insurance company writes up a contract stating you have the right to sell all your 100 units for $100k each, making $100k the Strike, for a total of $10M by the end of 4 months to that insurance company and asks you to pay $200k Premium for that contract.

Your instincts were right again, property prices are plummeting across the board, 20% down and your properties are now worth $80k, a $2M loss across your assets.

Lucky for you, you have an options contract, so you go to your insurance and put your asset for them to buy, forcing them to purchase your units at the agreed strike of $100k each. That saves you from the $2M loss (which is also the inherent value of the contract), minus the $200k premium you paid, a total of $1.8M.

If you were wrong and prices stagnate or rise, you're in no obligation to sell at a discount and you just lose the $200k premium you paid.

The contract in this example is a Put Option, got its name from the way you put the asset onto the insurance company and it's mostly used as insurance for asset holders.