Hedgemaster

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

nice read, thanks

Interesting read, thanks!

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?

If you consider trading stocks only (no options) then right now your best shot would be Fidelity:

https://www.fidelity.com/

Interactive Brokers may allow to opt out of PFOF (both stocks and options) but only if you are a high net worth individual with like +1M in assets:

https://www.interactivebrokers.com/en/home.php

There is a mobile app that that would allow trading PFOF-free (both stock and options) but still in a pre-launch waiting list stage:

https://www.trystrikes.com/

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

Hi, thx for the comment. For options trading it's certainly not a fraction of a cent..

I do agree though that DIY approach to investing is more advantageous than going with mutual funds that charge fund fees.

Hi Oliver, sorry but you seem to be missing the point

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..

hey, thanks, checked them out, they seem to be a financial advisor, not a broker-dealer:

"We’re your investment team. Titan is a premier investment firm that manages over $500M for 30,000 clients."

thanks! what charting do they offer? anything options-related (like implied volatility charts)?

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:

https://www.trystrikes.com/

Thank you for sharing your experience.

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":

https://www.globalinvestorgroup.com/articles/3695830/europea...

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..

Thank you for such a detailed review!

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.

thx, why don't you use the same broker for desktop and mobile? E-trade has very limited options analytics on its mobile app so a bit surprised..

Thanks, the issue with Robinhood imo is that their price execution is quite poor and you pay extra on the bid-ask spread.. kind of a hidden fee in a way.

Plus they don't have any relevant tools that would help to make a well-informed decision.

Thank you. Fidelity doesn't charge PFOF on stocks but they do accept PFOF on options. The bid-ask spreads for most stocks in negligible so PFOF-related damage wouldn't matter that much anyway, what cannot be said about options..

thanks, you can't trade options with Superhero, right?

thanks, good point

thx, have u tried mobile-only brokers like Webull or RH?

Hey, you're right crypto and options are different asset classes. Although even then there is an overlap: you can buy BTC or buy calls on BTC futures, which is a similar speculation on BTC price rising.

What I actually compared was the 2 activities: trading options vs trading cryptos, since from my understanding both activities share the same goal: growing a personal wealth.

Indeed, that would be a challenge for all web-reliant industries, although from what I understand it must be a minimum of 10k properly operating (i.e. noiseless) qubits to implement the Shor's algo..

Hey, thx for your comment.

I spent years trading options professionally:) Options trading is not a novelty, retail options trading (for the many) still is.

Do you have any numbers regarding retail options trading prior to the arrival of RH?

Hey Morten, thanks for your comment.

Would you mind to clarify what exactly you find to be a non-sense? I am aware that there is almost no options trading in Denmark (in fact worst in the whole Europe). Which is funny given that all its neighbours (Netherlands, Sweden, Germany) have relatively ok options markets. So indeed, if you never heard of options then it's quite likely to you it sounds like some alien nonsense..

But I would really appreciate to hear your thoughts on crypto. The Danes I know tend to be super conservative (imo) and advocate a complete worldwide ban on crypto.. Are you one of them??

Arbitrage opportunities for sure, due to a relatively high options liquidity there is much less of that edge.

Regarding the alpha itself, BTC and ETH positions can be replicated with options. Apart for long-only position you can go short on Bitcoin or even speculate that the price level would stay the same.