An option is a contract. An owner of land, called the optionor, agrees to sell his or her land to a particular buyer, called the optionee, for a predetermined price. The optionee/buyer is not obligated to buy, though. He or she holds all the cards. The optionor/seller must sell if the other party demands it. The optionee/buyer does not have to buy, no matter how much the owner wants to sell. The buyer makes no promises at all.
Because of technicalities having to do with contract law theories, the optionee/potential buyer must pay a fee to the optionor/seller in order to make the option contract enforceable in most states. The fee does not have to be in any particular amount or any proportion to the ultimate purchase price. It just has to be an amount the owner finds acceptable. The fee is a payment just for the option. The fee does not pay for the property, nor is it earnest money or a down payment. The optionor gets to keep the payment regardless of whether the optionee buys the property or not.