Quoted from Pdxmonkey:

You’re buying options, which is a common stock practice, the simplest way I can explain is your buying the stock or commodity (Bitcoin)in the future and picking a price. You pick the date and price. A call is you think the price will raise, a put go down. Example let’s say today you buy a call for 12/31/22 of btc at 50k, The price today is 35k. What your hoping for is the price to go over 50k because on the date you can buy (exercise) the option buy btc at a cheaper price. Most of the time people sell the option before the exercise date.
Example say the 50k call.
Let’s say btc goes to 75k. If you bought one btc at 35k and the value is 75k your profit selling is +40k.
Let’s say you bought 50k calls and it goes to 75k from 35k. If you bought the calls for 35k (I wouldn’t buy all at one price but for the example to make it easy) you would buy 525 contracts.
If by the 50k hammer price the price is at 75k you stand to be able to sell your calls at about 120k profit (estimate because you need a buyer to complete the sell without exercising) if you waited till the end. Time is a big factor as you can sell contracts early and if you asset moves more in the direction it’s worth more. Personally I never exercise them and always sell before. I try to slowly start selling when in profit.
Risks
Huge risks if you miss you target along the way the money you put up decays faster. If you wait till exercise date and miss the hammer your calls are worthless or next to worthless.
If options are new to you please do a lot of research. The rewards are greater if you call them right the punishments are much greater too. It’s a confusing process till you do it a few times.
Edit: NFA
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