Explain how call and put options can represent a leveraged way of investing in the stock market

Question:

Explain how call and put options can represent a leveraged way of investing in the stock market and also enable investors to hedge their risk completely. Specifically, under what circumstances will the addition of an option increase the risk of an existing and under what circumstances will it decrease risk?

Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...