Option contracts give buyers the right, but not the obligations, to buy or sell underlying assets with a pre-specified price, or strike. In exchange of this right, buyers will have to pay a premium to the sellers prior to entering the contracts. This premium is used to compensate the situations where either the underlying asset price is above the strike in case of call option (to buy the underlying assets), or below the strike in case of put option (to sell the underlying assets). In both cases, the options expire 'in-the-money'. On the flip side, if the asset price is below the strike for a call option, or above the strike for a put option, the buyers get nothing back as the options expire 'out-of-the-money'.