Options allow investors to bet on whether a stock will go up or down in price, but experts warn they can be risk and people should do their research ahead of time
is unveiling new features for options traders on its online investing platform, joining other institutions that are catering to retail investor demand for the leveraged and risky form of trading.
The retail investing landscape has changed dramatically in recent years, as online trading platforms such as Questrade and Wealthsimple have spurred greater competition to make self-directed trading for stocks, cryptocurrencies and other products easier for casual investors. “So we’ve made a focus on how do we build digital investing tools and capabilities that match with what we’re seeing with those macro trends.”
He added that a move by a Big Six bank to add an educational component and lower fees as BMO has done could be make it desirable for newer traders. Fees are of a particular interest because they’re often much higher for options than when trading stocks, while the educational component is important because of the potential for large losses.
“When multilag trading becomes available … people often trade in strategies that have really high volatility, really high embedded leverage and lottery-like payoffs,” said Mr. Felix, adding that a Dutch study in the Journal of Banking and Finance of 68,000 accounts and more than eight million trades found that most investors take significant losses on their options trades, much more than when trading equities.
Trading Platform Trade Wealthsimple Price Trades People Bank Of Montreal Ottawa Benjamin Felix
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