Mom and Pop Investors Took a Billion-Dollar Bath Trading Options During the Pandemic

[Nobert]

actually most do know the difference: you can buy options on Tesla in your robinhood account. You can’t buy futures on Tesla.

The difference in amount of choices, is not an accurate measurement of knowladge or even, intellect.

The fact that you can't do something, does not indicate, that you know about it's very existance in the first place.

T.Edison at day one : so far i know for sure, that i can't make an electric bulb in this way.
T.Edison at day 365 : now i know of 400 ways, of how it is not going to work.

But if we are having those teens in mind, that are creating apps that follows Musk's plane and then blackmails him, yes, those little asholes knows things like that for sure. Had different user groups in mind.

 

[TheDawn]

retail traders were buying options because they couldn’t afford to buy the individual shares at hundreds of dollars. You could see it in the implied vols and the skew. They overpaid for vol and the direction couldn’t overcome it.

They could still buy shares on margin until all the brokerages forbade it. Stocks would've still been the safer and preferable choice given that it has no time decay or experience volatility crush. When the investors who went into the game too late facing the restrictions, they had no choice but to buy options at DOTM if they wanted to be in the game and were forced to deal with the volatility crush that they wouldn't have needed to deal with if they had been allowed to buy shares. So yeah ok retail traders are inexperienced but they have also been set up for failure, in a way, by not being allowed to trade the instruments that they wanted to trade. And honestly those brokerages and DTCC that doled out the restrictions really should've been sued for unfair dealing and be compensated for their losses.

 

[newwurldmn]

They could still buy shares on margin until all the brokerages forbade it. Stocks would've still been the safer and preferable choice given that it has no time decay or experience volatility crush. When the investors who went into the game too late facing the restrictions, they had no choice but to buy options at DOTM if they wanted to be in the game and were forced to deal with the volatility crush that they wouldn't have needed to deal with if they had been allowed to buy shares. So yeah ok retail traders are inexperienced but they have also been set up for failure, in a way, by not being allowed to trade the instruments that they wanted to trade. And honestly those brokerages and DTCC that doled out the restrictions really should've been sued for unfair dealing and be compensated for their losses.

I think you are focusing on the meme stocks in feb 2021.

I’m focusing on the summer and fall of 2020.

 

[TheDawn]

I think you are focusing on the meme stocks in feb 2021.

I’m focusing on the summer and fall of 2020.

Not Feb. 2021, around Jan. of 2021 but it was those times that especially did the retail investors in.

 

[newwurldmn]

Not Feb. 2021, around Jan. of 2021 but it was those times that especially did the retail investors in.

same thing. I remember it as feb because that’s when I made a ton trading the vol (with certainty that it was overpriced )

 

[jtrader33]

same thing. I remember it as feb because that’s when I made a ton trading the vol (with certainty that it was overpriced )

Upside call dispersion?

 

[surfer25]

same thing. I remember it as feb because that’s when I made a ton trading the vol (with certainty that it was overpriced )

Which strategies were you using to trade the vol at the time?

 

[newwurldmn]

Which strategies were you using to trade the vol at the time?

options were way way expensive in dollar terms, after the buy restrictions were put in place. in the 20 years i've been trading vol, i'd never seen a market behave that way. its unlikely we ever will again.