2 ms·

> You have to go out of your way to trade options (they're disabled by default), and the only way you can get options enabled in Robinhood as a college freshman

> You have to go out of your way to trade options (they're disabled by default), and the only way you can get options enabled in Robinhood as a college freshman is to straight up lie on the application. Isn't this a problem with most brokers? They all seem to require that you claim experience trading an asset class before they let you trade that asset class.

tidepod12 6y ago
Brokers are required by law to "protect" traders from financially harming themselves by restricting the trades that can be made until the trader verifies that they know what they are doing. Some brokers will go as far as to personally call you up and give you an on-the-spot quiz about how options work before letting you trade them, for example. Many brokers seem to have gotten very lax about this in recent years, and even Schwab/Ameritrade allowed me to trade options without verifying anything. My guess is that the recent Robinhhood/GME fiasco is going to see FINRA cracking down hard and reinstating some strict verification procedures.
- rrrrrrrrrrrryan 6y ago
  I was able to trade options with TradeKing in 2010 by just checking a box, claiming that I knew that I was doing. (I was still in college and did not know what I was doing, but fortunately only ended up losing a few hundred bucks.) This isn't new - it's how it's worked for a good long while.
  - tidepod12 6y ago
    The regulations, such as FINRA Rule 2111, were not in place until the early 2010s. FINRA/SEC implemented stricter requirements for the verification I mentioned in my first comment, but over the past ~5-7 years the brokerages have relaxed them. So yes, it is new relative to your experience in 2010.
rickyc091 6y ago
Yeah, it's pretty easy to get level 3 trading option these days. In fact, if you select level 3 and answer incorrect, they even prompt you and say, hey that option won't let you get verified for level 3. With older brokerage firms, they use to call you up after you signed up. You would have to chat with them on the phone before they unlocked your account.

tidepod12 6y ago

Brokers are required by law to "protect" traders from financially harming themselves by restricting the trades that can be made until the trader verifies that they know what they are doing. Some brokers will go as far as to personally call you up and give you an on-the-spot quiz about how options work before letting you trade them, for example. Many brokers seem to have gotten very lax about this in recent years, and even Schwab/Ameritrade allowed me to trade options without verifying anything. My guess is that the recent Robinhhood/GME fiasco is going to see FINRA cracking down hard and reinstating some strict verification procedures.

rrrrrrrrrrrryan 6y ago
I was able to trade options with TradeKing in 2010 by just checking a box, claiming that I knew that I was doing. (I was still in college and did not know what I was doing, but fortunately only ended up losing a few hundred bucks.) This isn't new - it's how it's worked for a good long while.
- tidepod12 6y ago
  The regulations, such as FINRA Rule 2111, were not in place until the early 2010s. FINRA/SEC implemented stricter requirements for the verification I mentioned in my first comment, but over the past ~5-7 years the brokerages have relaxed them. So yes, it is new relative to your experience in 2010.

rickyc091 6y ago

Yeah, it's pretty easy to get level 3 trading option these days. In fact, if you select level 3 and answer incorrect, they even prompt you and say, hey that option won't let you get verified for level 3. With older brokerage firms, they use to call you up after you signed up. You would have to chat with them on the phone before they unlocked your account.