You did win, but what about the price you paid for this option? You only profit if your option price + strike price (1200) is greater than the ETH price at settlement tomorrow. The option at 1200 costs 400 each, and if the price tomorrow is below 1600, you will incur a loss. It's not just about the price exceeding the strike price (1200) for you to make a profit.

Options themselves are also a type of tradable asset.