And guess what? This following of "smart money" is in fact a self-fulfilling prophecy: after let's say Pelosi/her husband bought some stocks some large group of retail traders jump in and pump the price higher.. It likely has a negligible effect on highly liquid names like AAPL or GOOGL but might cause a significant price move for a smaller/less liquid names
By "investments" I meant shares owned by retail investors, and in case of a market crash options can serve as a cushion. Also, everyone has a different understanding of a difference between "trading" and "investing", in most cases when the investment horizon is less than 1 year ppl call it "trading"
You say that "options are high risk coz we cannot predict the future".. well, everything is a high risk then since most people imo cannot do that :) Stocks can be no less risky than options - when the company goes bust shareholders oftentimes lose 100% of their investment. But with options people can fine-tune their exposure and risk profile. For example, owning stocks and reasonably OTM puts would mitigate the investor's exposure to that particular company.
I find your concerns about options trading reasonable though, especially after the Robinhood experience. Just like you said RH doesn't provide any meaningful tools effectively turning options trading in a compulsive gambling. The way how they treated their clients (in fact not clients but an inventory, MM are their real customers) leaves much to be desired, and yes, retail options traders should have an SLA in place with their broker unless they don't mind being an inventory.
Hi, thanks for asking, no it doesn't rely on WSB reddit sentiment, twitter, etc. but instead uses the tools applied in the options trading industry but translated into the language comprehensible to someone without a financial background. For example, it would pick up a short squeeze in GME before it actually happened by analyzing gamma exposure from the options data.
Hey, thanks for sharing your views! The way how retail options trading being done currently is indeed very close to compulsive gambling, since retail traders don't get proper tools and cannot evaluate their risks.
But when implemented properly options trading can provide 2 key benefits: boosting potential profits and mitigating associated risks. How else would retail traders be able to preserve their investments in case of a market crash?
Hi Gary, I agree with your point. Thanks to Robinhood other brokerages were forced to drop their commissions. My point is that situation could be improved.. moreover, in many countries the PFOF practice is banned
Hey, as I understand you are from the UK.. indeed gambling has been a big business there for many decades, it's not even being taxed over there! And CFDs & spread betting fall into that category.
And I do agree that RH somewhat gamified options trading turning it into gambling. But my view is that options trading should not be like that. People should have appropriate tools so they can clearly understand their risks and use options for hedging and profit boosting.
And speaking of the UK most ppl are still completely unfamiliar with options trading and the benefits of it.. many label it as just another way to gamble, which is a shame..
heard mostly positive feedback on them, it's a shame though tastyworks don't disclose their execution quality and price improvement for the end-user like Fidelity and Charles Schwab do.. even robinhood does that.
the other concern about Tastyworks is that they have been recently acquired by IG Group (UK CFD provider) and might get greedy with the price improvement suffering. IG's poor fill quality is their modus operandi in the UK..
Totally agree with your point, M1Finance is not for trading.. definitely not options, more like long-term ETF investing.
I never heard of Titan, is it a desktop or mobile app? Or both? Could you please share a link?
If you trade options but have no time to stay on top of all the relevant developments, should probably check out this STRIKES mobile app, it provides intuitive analytics and notifies of many pitfalls to your options positions:
My sister's family actually lives in Germany so they are somewhat familiar with the US retail brokerages and in turn I am familiar with the German ones, namely Trade Republic and flatex, only 2 to choose from :)
So regarding trading stocks on Trade Republic, you get a super wide bid-ask spread that is unheard of in the US.. They route their trades through a Hamburg-based market maker called Lang & Schwarz, and try to make as much as they can on stocks(!) PFOF.
Regarding the derivatives, they don't offer options at all!! What they do offer is called "optionsscheine" which is not an option but a warrant, created by some investment bank like Deutsche or Commerz. Apart from a very real counterparty risk compared to options, they are quite expensive. And yes, you cannot "go short" with this optionsscheine, only long. So no verticals or diagonal option trades. Below is the link if someone wants to learn more about investing in these "optionsscheine":
Please, don't get me wrong, I am not mocking Germany and I do respect German ppl, I just think that retail brokerages there suck bigly due to the lack of competition and a severe red tape. Would be glad to hear your counter-arguments.
IMO the main disadvantage of Robinhood is not their execution quality (which is relatively low) but complete absence of any helpful tools to make a well-informed decision.
You cannot easily see what options are over or under-priced IV-wise. It also does not notify of any important events that might affect your options positions.
For example, when someone owns a deep ITM call and ex-dividend date is approaching, it might make sense to exercise that call and buy an identical OTM put. But most retail traders are unaware of such technicalities and therefore in the long run sustain losses caused primarily by such basic mistakes..
Does TOS have any options-related insights like easy-to-analyse implied volatility smile for Sentiment Analysis? Or like volatility skew to easily identify which options are under-priced/overpriced?
Totally agree with u regarding RH, built for gambling not trading..
Thx, what aspects of their service do you find the most attractive?
I recently listened to the podcast of their CEO https://www.linkedin.com/in/jmalling/ He sounded rather elitist to be honest.. Like everyday ppl are just not intelligent enough to trade options, etc. So that was a bit off-putting.