When a stock's price moves (either up or down) you will make more money if you are holding an option than if you are holding the stock (in a long or short position).

These are referred to as derivative securities because they derive their characteristics from the actual stocks they represent.  Derivatives (options and futures) have no impact on the company.  Since neither options nor futures represent a real thing (ownership) in order to go long, someone else has to go short (like betting on a football game).  This means that both are Zero sum gains (only one investor will win with derivatives).  If you long a call option, someone has to be willing to sell the call option.

Long position - Buying a stock with the hope that it will increase in price.

Short Position - Selling a stock (that is borrowed) with the hope that it will decrease in price (so that you can buy them cheaper to replace the stock you borrowed).  Short sellers think the security price will decrease.

Here is an example of options.  This is an important concept so read this a couple times until you understand it.

Buying a long call option on real estate: You are thinking about buying a piece of property but are undecided and don't want someone else to buy it before you decide.  You pay the real estate broker $2,000 for the right to buy the property within the next couple of months at its current price ($80,000).  This locks in the price for you.  A couple weeks later you are still undecided.  The real estate broker calls and says that he has found another buyer for the property that is willing to pay $90,000 for it.  You now have a choice:
    You can buy the property as agreed for the $80,000 and keep it (total cost was $82,000) or you can buy the property and simultaneously sell the property to the other buyer for $90,000 and just take the cash ($10,000). Your profit would be $8,000 on your $2,000 investment - a 400% return.

Had you purchased the property for $80,000 out of pocket and then sold it for $90,000 your return on your investment would be 12.5%.  With the option your return was 400%.  After the price of the property increased beyond $82,000, Your profit on the option will move dollar for dollar with the price.  This is called leverage.

If the property went down in price to $70,000, you would back out of the deal and be out of pocket the full $2,000 cost of the option.  Which was a smaller loss than if you paid the $80,000 and it was only worth $70,000.

That was an example of buying an option for speculation.  You can also use an option to hedge your portfolio against a loss.

Advantage of options and futures – it allows insurance and hedging without selling the stocks.

Disadvantage – futures forgo potential gains and options are expensive.