4 ms·
It is truly risk free. You always buy the call using the customer's money but you only give them the call if every part of the parlay is correct. Assuming they
by muxl 1y ago
It is truly risk free. You always buy the call using the customer's money but you only give them the call if every part of the parlay is correct. Assuming they charge a commission in addition to the asset price to cover transaction processing they shouldn't lose money
Edit: I don't really know how pricing these things usually works but I could see taking some risk on to price these attractively
- toast0 1y agoI get that Robinhood's business model is stealing from the poor and giving to themselves, and their customers are mostly unsophisticated, but why wouldn't the customers just buy the underlying call options if the price to buy the parlay is the sum of the underlying options?
- mrDmrTmrJ 1y agoBecause, to quote your comment, "their customers are mostly unsophisticated." And, part of the appeal of the product, is they only pay out if *all of them are in the money. Hence the "lotto-like" return profile.
- quamserena 1y agoWhile Robinhood users are unsophisticated (seriously use another brokerage…) I think that they would see through this.
- sdwr 1y agoWhy would anyone ever take that bet? It has to be leveraged, which is where the risk comes from.