| > In the first three months of 2020 ... [Robinhood users] also bought and sold 88 times as many risky options contracts as Schwab customers, relative to the average account size > And let’s remember that options are far more illiquid and opaque than standard equities. Okay, first of all the growth of the options market is AMAZING, and their utility increases the more liquid the market is. So massive new groups of traders with a low barrier of entry make options much more liquid, and this is amazing. There used to only be one series of options that expired once per quarter and had 5 cent ($5) bid and ask spreads, and strikes only every $5 or $10 dollars. Now there are 20 series trading at once and pretty much all indice constituent companies, let alone the index itself, alongside strikes every $1 - $2.5 dollars, even $.50 cents sometimes. There are so many strategies that were unviable because the spreads were too wide, the strikes were too few and far between, and the commissions structure was prohibitive. That's all changed now, and that's the other perspective. Robinhood is also still handicapping users, as the regulations allow for much greater amounts of leverage and margin capabilities, which Robinhood doesn't offer yet, which TD Ameritrade and others have offered all along. So all the surprise and angst directed at Robinhood is as ignorant as the speculators that you are worried about. This is an education problem, not an access problem. They are mutually exclusive. To the people not using options for what they were made for: "Just avoid holding it in that way." - Steve Jobs |
Are you claiming Robinhood users are responsible for a significant fraction of option market liquidity over the past year? Because that’s categorically wrong.