This is the difference between the price you have an option to buy Xyz at in this case $40 and the price it is actually trading at $50.
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If on or before the expiration date Xyz is trading at less than $40 per share then you would not exercise your option and you would have lost the price you paid on the option $5.
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Regardless of how you want to trade the markets you need an approach.
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The seller in this case was obliged not to sell that piece of land to anyone else for the next sixty days.
They may decide that the Euro will appreciate against the US Dollar and take what is called a long position in Euro.