Unfair Advantage: How Options Trading Favors the Elite

Large trading firms such as Citadel and Susquehanna are paying brokerages like TD Ameritrade and Robinhood to trade against their customers' orders, taking advantage of unsophisticated retail investors who are lured by the potential for massive overnight wins and zero-commission trading. Retail trading now accounts for up to 60% of the total market volume in options, with the popularity of options that expire daily increasing. However, the vast majority of retail investors lose money in options trading, while the trading firms consistently profit. Regulators should prohibit payment for order flow and penalize misleading advertising practices to protect retail investors. Instead, retail investors are advised to focus on low-cost index funds for long-term wealth building.