How Robinhood Has Changed Options Trading | | |
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We've entered a new world in which novice traders are gaming the stock market. New investors have flooded trading platforms like Robinhood (which saw memberships jump more than 30% in the first quarter alone), and they're now betting on stock picks without commission fees.
Some compare this new style of trading to gambling, where people take on risky investments in the hopes of short-term, home-run returns. Those same traders are now taking it a step further by betting on the options market.
Swarms of internet groups are now placing orders for cheap out-of-the-money options, hoping for 100% intraday returns.
The veracity and volume of the order flow stemming from these trades could be mistaken for a single large institutional trade. But this is not "smart" money. These are tactical plays developed to move the needle in certain companies to make a quick profit.
Watch the interview I had with Midas Letter Head Trader James West to find out what to look out for in this new options market so you don't get caught up or misled by this peculiar option flow. | | |
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