The options are free, but if they want to exercise them they have to pay. I haven't seen any options over 20 cents. So is this guy saying he doesn't have the confidence in the company to exercise his options at 20 cents, i.e. he thinks he will be able to buy them cheaper?

As already specified, stock options are an agreement or a contract between two parties by means of which the seller sells the privilege to the buyer for a specified period of time in order to either purchase or sell stocks at an agreed price tag. If the buyer of the privilege chooses not to exercise his/her right within the agreed time period, then he/she loses the privilege and the opportunity to either purchase or sell stocks as the case may be.

The contract between the parties usually mentions the period for which the privilege is being awarded and the price at which the stock is to be either sold or purchased besides other terms and conditions as mutually agreed upon.

If you own the privilege to buy shares and the current market price of the stock is higher than the agreed upon price, you have a favorable deal at hand that you may consider going ahead with. On the other hand, if the market price of the stock drops below the agreed price, you can just let the stock option expire. If you own the purchase privilege, the case is similar.