Index funds are typically passively managed unlike mutual funds. I'm not saying what you are suggesting is impossible, but generally it would go against the definition of an index fund.
Index funds allow for options to be traded using the underlying holdings. This is one of the ways a specific index fund can outperform (or underperform) the index.
Trading options on sure things can easily generate >10,000% returns in a matter of days if the swing is large enough. All it takes is a few of these sure things a year to generate staggering returns.
Imagine what you could do with $100,000 in options contracts if you knew about the next Lehman Brothers collapse. That particular event turned a $0.01 option into $50-75, the on the flip side, the manager could offer OTM puts on existing holdings that would practically nullify any loses. Granted, you don't get a LB-level event every year, but there's always a few pretty good ones each year.