The other way of looking at it, is that you can spread your risk by purchasing options at a discounted price to the conversion price. If the SP rises to well above the conversion price you profit with no downside, but if the SP fails to get in the money then your loss is only a fraction of what you would have outplayed for full priced shares.
It is all about balancing risk and return.
kippax
options, page-21
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