Here is a summary of some of the advantages and disadvantages to owning options. Advantages Allows you to drastically increase your leverage in a stock if you are speculating. Options in 100 shares will cost much less than actually buying the 100 shares. If used properly options can be a useful tool in hedging against an existing position you may have. Disadvantages These are highly complex and highly leveraged, if you are using options to speculate they require a close watch and a high tolerance for risk .
Options require more than just a basic knowledge of the stock market.
An important concept to remember is the difference between an option holder and an option writer. An option holder has the right to chose, to purchase a stock at a set price within a certain time period. Whereas an option writer has the obligation to fulfill the choice of the option holder.