Options give much greater leverage. The mysteries of option pricing are not spoken of to the uninitiated, but a 5% change in a stock's price is very roughly a 100% change in the prices of options to buy or sell 5% away from the initial price.

Yes, they save you getting a loan. More important in this case is short selling. Options are still only useful if the price goes up. That gives the predictor something to do when their predictions are that the price will fall. If the actual market is sufficiently developed as to allow that kind of trade the prediction market becomes rather redundant.