Option is the trade of the right to buy and sell a product at an exercise price (contracted price) within a certain period (expiration date).
The right to buy is called a call option, and the right to sell is called a put option.
The difference with Futures is that although Futures must be traded at the price it was contracted for, option was bought 'right' at option premium, so depending on the situation, you may give up the right to buy or sell.
Let's continue with the examples of Futures.
The owner of the restaurant suddenly thinks like this. Will the price of rice really go up to $30 in the fall?'
So the restaurant owner suggests again. "Sell the right to buy rice from you for $20 now for $4 in the fall."
1. If the actual price of rice becomes $30: Restaurant owner's gain = $30 (current rice price) - $20 (purchased rice price) - option premium $4 = $6.
2. If the actual price of rice becomes $10: Restaurant owners waive their right to options. => In this case, option premium lost $4 because you bought option rights.
3. If you made a Futures transaction instead of Option and the price or rice becomes $10: $10 (current rice price) - $20 (Futures transaction price) = -$10 loss.
On the contrary, the farmer may offer the restaurant owner an option premium and buy the right to sell rice.