Equity Options in Hedge Funds

Hello,

I am Senior undergraduate studying finance. I trade equity options primarily though short premium strategies. I don't have much knowledge about hedge fund activities.

Do hedge funds use exchange-traded (not OTC) equity options for any purpose other than hedging? If so, how frequently? For example, lets say you're a hedge fund and you do your DD and you think Apple is worth $170/share and will be at that price in Jan 2019 (Price at time of writing is $183.83). You could short the stock (100 shares), maybe pay a borrow fee, and hope it goes down to 170. When it hits 170, you buy back your shares for a profit of $1383. Assuming a 50% margin requirement, (which I am not sure hedge funds have), the return would be 1383/9195.50=15.03%. Let's say they sold the 185 call in Jan2019, which currently trades for 13.12 mid price per share. If the stock stays below 185, which they believe will happen by Jan2019, and the margin requirement for retail traders is about $3580, (could be less for hedge funds) the return would be 1312/3580, or 36.64% and a higher probability of success is greater than shorting the stock because they are profitable up to an AAPL share price of $198.11 in Jan19, whereas the short position would be a somewhat sizable loser at those levels. I understand that option success is more based on timing than traditional "value long and short" strategies, and that may make people uncomfortable, but in an industry where one is judged partially on annual returns (shorter-term), options may be the most efficient use of capital. Furthermore, the liquidity in equity options could be another factor. Hedge funds manage huge amounts of capital and there are only roughly 10,400 of that Jan2019 185C for a total value of $13,644,800 and AAPL one of the most liquid underlyings with relatively high option prices, compared to a $40 stock for example.

So I'm just curious if they do utilize them for applying their assumptions into trading strategies, or use options for hedging risk only. If they do use it solely for hedging risk, how frequently do they do that as well?

Thanks!