Short answer

• Options (buying calls/puts) usually give the highest controlled leverage for a defined, limited loss — i.e., you can control a large notional position by paying a relatively small premium, while your maximum loss (the premium) is known. (Investopedia.com)
• Margin (borrowing from your broker to buy or to sell short) gives linear exposure and can be cheaper for delta exposure, but it carries margin calls and the potential for unlimited/large losses; Indian rules and exchange-set margins also cap available leverage. (Investopedia.com)

Why (short, practical comparison)

• How leverage appears:

  • Options: one option contract controls many shares (or index notional). A long option’s premium is a small fraction of that notional, so percentage returns on premium can be large if the underlying moves in your favor. But option prices include time decay (theta) and volatility premium. (Investopedia.com)
  • Margin: you pay part of the position value (initial margin) and borrow the rest or use intraday leverage set by broker/exchange. Returns/losses scale linearly with the underlying. There are maintenance margins and margin calls. (nsearchives.nseindia.com)

• Risk profile:

  • Long options: limited downside = premium paid; unlimited upside (for calls) or large upside (puts). However, the option can expire worthless (lose 100% of premium) and suffers time decay. Volatility and time are important. (Investopedia.com)
  • Margin/leveraged cash positions: losses can exceed your initial capital; brokers can liquidate your position on a margin call. Short selling on margin exposes you to theoretically unlimited loss. (nsearchives.nseindia.com)

• Cost and friction:

  • Options: you pay premium + commissions/spread; implied volatility can make options expensive; also theta (daily time decay) is a real cost for buyers. (Investopedia.com)
  • Margin: you pay interest on borrowed money (if position held longer than intraday) and may face higher margin requirements at volatile times; in India, exchanges/brokers and SEBI rules restrict how much leverage brokers can offer and set VAR+ELM margins that limit practical leverage. (Chittorgarh.com)

• Regulatory & market constraints in India (important):

  • SEBI/exchange rules limit how much extra leverage brokers can offer (post-2019/2021 changes) and use exchange-determined margins (VAR + ELM). Intraday/leverage offered by brokers is therefore capped and can change with exchange circulars. This affects how much margin leverage retail traders actually get in India. (Chittorgarh.com)

Which is “better” depends on your objective and risk tolerance

• You want maximum controlled upside with capped loss and can tolerate time decay: long options are generally better for asymmetric leverage (big % gains vs limited loss). (Investopedia.com)
• You want simple linear exposure (bet on underlying price direction), lower transaction complexity, or to avoid option premium/time-decay costs: margin gives direct leverage but with greater downside risk and potential margin calls. (nsearchives.nseindia.com)
• For short-term intraday scalps where exchanges provide limited standardized leverage, margin/intraday products may be more straightforward; for directional multi-week/month views, options can provide larger notional exposure per rupee spent, but cost/decay and liquidity matter. (Chittorgarh.com)

Practical guidance (concise)

• If you cannot afford to lose the entire amount you trade, avoid high margin or uncovered short positions — consider buying options (limited loss). (Investopedia.com)
• If you use margin, size positions conservatively, keep buffer above maintenance margin, and be prepared for forced liquidation in volatile markets. (nsearchives.nseindia.com)
• If you buy options, manage time decay (consider spreads, longer-dated options, or selling premium if you understand the risks). (Investopedia.com)

If you’d like, I can:

• show a quick numeric example (same notional, compare margin vs long option P&L), or
• outline the specific margin and option margin rules for a particular Indian broker or a specific stock/index. Which would you prefer?