Why should you trade forex options?

In other words, does trading forex options have an advantage over holding a position in the spot forex market?

When purchasing a currency option, you can limit your risk to the amount (called premium) you gave for purchasing the option, i.e. the profit is unlimited but your loss is limited - a nice setup. (This happens only in the case of buy rather than selling options.) You can say "But can't I limit my risk by placing a stop-loss?". You're right, but when your stop gets hit, you are out of the game, while if the value of the option you bought plummets to 0, you still have it as a (quite miserable) market position, i.e. there still exists the possibility that by the expiry date of the option, it could indeed acquire some value and turn a profit. (Hope dies last.) Of course, on the other hand, when the forex option expires you are out of the game, too.

One of the most important uses of forex options is so you can hedge your spot market positions. We'll talk later about that.

You have to decide for yourself whether to use forex options or not, and if you do use them - when exactly. Usually position traders and swing traders use options more often in their trading as it suits their longer-term horizons. In all cases, trading forex options seems like a more boring job than doing spot forex.