This is not correct. Stock options can decrease volatility and serve as insurance against large increases or decreases. That is the point of hedging.

For example if I have 100 shares of AAPL @108 and I'm nervous of it dropping below $80 in the near future, I may buy a MAR16 put option at $90/share for a few pennies in the hopes that if the stock does actually decrease to a level that makes me feel uncomfortable, the options will increase enough to offset the stock loses.

So they very much can be insurance. It just depends on how you play them.