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To expand on sort of a combination of 1 and 3:

Options make certain things tradable that were not previously tradable. As you already say, given only the spot, you can basically trade delta - will it go up or down. With options, you can trade vol - will it move little or a lot. With a basket of options versus an option on a basket you can trade correlation - will things move together or not. With CDS you can trade credit (separately from interest) - will a firm go bust or not.

And creating these markets allows for more informed opinion on what's going on.

Having said that, I think derivatives are overrated and fulfil few socially useful functions, and those are often fulfilled by the simplest derivatives, not the complex stuff banks like to peddle (because their fees are higher, yet hidden).




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