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Comment by mmhsieh | Hacker News Reader

to avoid things like this, robinhood might be better off if it literally operated as a bucket shop. you take bets on stocks but don't actually buy or sell them.

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Isn't that illegal? Or at least, makes them subject to a bunch of gambling regulations they wouldn't otherwise be subject to?

https://en.wikipedia.org/wiki/Bucket_shop_(stock_market)

if you are a broker-dealer caught bucketing orders, you are absolutely violating the law. though i have no idea how to even categorize robinhood.

Buying and selling stocks is not a big deal. Worst case you go to $0. It’s the options.

Many brokers require you to jump through lots of hoops before trading options. And even then limit you to simple contracts first. Maybe rh should do the same,

You do have to answer some questions and wait for approval before Robinhood will let you trade options. It's not available by default.

I've done it, takes less than a minute and is akin to accepting a EULA (which of course no one reads). On the flip side, TD Ameritrade had me go through a somewhat lengthy process and required a 2,000 deposit. They even shipped me a technical booklet on options trading. I wouldn't be surprised if they shorten that process though. Robinhood spawned an entire generation of 18-35 year old high risk & low info options traders. Everyone else probably wants a piece of that.

buying options is no big deal as well; the most you lose is your investment. when you sell options, either naked, covered, or in a spread, the rules are much more complex. should be left to expert marketmakers or full time prop traders. very bad idea for amateurs.

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