Read this article on SeekingAlpha today. Will FTrade let us place options?
"With the pandemic limiting many choices this year, investors dove into options. Bad pun, but the statistics are astounding. Check out the following few data points:
• Around 39M options contracts have traded daily on average this year, rising 35% from 2020 and the highest level ever - Options Clearing Corp.
• Retail investors represent more than 25% of total options trading activity due to access via commission-free brokers - Alphacution Research Conservatory.
• The average daily notional value (volume multiplied by spot price) of traded single-stock options climbed to more than $450B in 2021, compared with $405B for stocks - Cboe Global Markets.
What’s fueling the surge? Hot trading apps and social media hype has seen retail crowd pour into the market since competition between brokerages eliminated trading fees in 2019. While stocks were the initial focus, much of the attention today centers around options, which allow traders to notch big returns (or losses) without having to actually purchase shares. Besides the leverage, many investors are also using derivatives as a hedge, such as protecting their portfolios against sentiment changes - a good example of this was the recent Fed meeting.
It’s also been a big win for the brokerages, which are scoring some big bucks off the options rage. Popular brokerage Robinhood (NASDAQ:HOOD) even generated $164M from options trading in the third quarter, more than triple its transaction-based revenue from traditional stock trading. Activity has also been prominent in the so-called meme stocks, which initially created massive short squeezes in names like GameStop (GME) and AMC (AMC), but eventually created a swarm trading strategy of its own.
Some caution: The increased engagement is attracting the attention of regulators like the Financial Industry Regulatory Authority. Wall Street’s self-regulatory arm is considering whether changes to the options rules may be warranted, including regulations around options account approvals, supervision and margin requirements. FINRA’s request for comment will be published in the coming weeks to solicit insight from exchanges and brokers about options trading and the risks involved."