> new groups of traders with a low barrier of entry make options much more liquid
Are you claiming Robinhood users are responsible for a significant fraction of option market liquidity over the past year? Because that’s categorically wrong.
Are you claiming Robinhood users are responsible for a significant fraction of option market liquidity over the past year? Because that’s categorically wrong.
No, I am not quantifying Robinhood users, only elated to see one chisel helping narrow the bid and ask spreads across expiration dates.
Shouldn't bother you that much.
It's the same as Tesla making electric cars popular. They don't sell the most cars, but you'd have a hard time arguing they haven't moved electric vehicles forward.
Options don't trade as frequently as cash on most names, so you don't actually need people to buy and sell in order to make the market tighter. They just have to place orders that tighten the spread. Price discovery becomes easier even if you only have one additional order placed inside the prior NBBO, because it affects the fit of the vol surface.