This just singles out sports betting apps and makes no mention of things like Robinhood, predictit (rip), or the likes. Big whoop
If your drug of choice is deep-OTM weekly options, it suddenly becomes straight up gambling.
but say, people blowing out accounts trading emini sp500 while having no idea what a futures contract is, sure why not
This seems to be an explanation ex post facto and not a reason for its genesis. This insane liquidity generation scheme is one of many expressions of the force that drives unbridled exponential growth, which we can now see is in excess of what our environment writ large can sustainably provide.
The pursuit of short term money-on-money returns is eating the world, and sycophants who personally benefit are turning blind eyes to this very basic and obvious fact.
(1) Stocks do make money in the long term. If you buy and hold broad ETFs like SPY and QQQ you can do very well on Robin Hood.
(2) The cumulative effect of people's speculation helps set prices and allocate capital. Even if many speculators loose, collectively the speculators have excellent judgement. It's as if the sports betting helped decide who wins the game.
(2) Slightly better argument, but retail orders don't have much effect on the market overall.
On the other hand, market makers don't want to trade against, say, Elon Musk buying or selling Tesla because they assume that kind of person knows something and they try to make them pay through the nose for liquidity. That is why people like that might announce well ahead of time the schedule that they plan to sell stock to diversify or raise funds and why there is a special sector of the industry to help move large blocks of stock, convincing buyers that they are not being exploited.
It was shocking the lack of basic knowledge people there have about the fundamentals of options pricing, their behavior and most importantly the risk involved. In itself this is not a big deal but through seeing conversations it was clear that many of these people are approved for very high level options trading and have margin accounts.
Options are fun to study because they are the real world application of a range of probabilistic tools, and properly managing risk involves lots of cool stats. But precisely because of this trading them really should be left to people that know what they're doing, otherwise they become an incredibly powerful foot gun.
But here's the thing. Options are a zero sum game, and currently 25% of options trading is retail. If I'm an institutional investor/trader this is great for me because it's like inviting a bunch of tourists to a poker table with professionals.
Did something happen to PredictIt? They look up to me, and I still get marketing emails from them. Not finding any news storied about their demise.
But after reading your comment I did a quick search and apparently they're suing the CFTC to remain open(?). So maybe there's a chance, but as of now it unfortunately looks like they're not gonna be running much longer :(