As retail investors expand into asset classes that were once largely reserved for institutions or high-net-worth individuals, options trading has become a central issue in the broader conversation about market access, investor protection, and financial education. The surge in participation through digital brokerage platforms has intensified scrutiny on how these platforms support users in managing the complexity and risks associated with derivatives.
This growth in retail options trading has prompted a wide-ranging industry response. A shared perspective has emerged that highlights the importance of education and transparency in fostering responsible trading behavior. At the same time, preserving broad access remains a key objective, reinforcing the view that well-informed participation should be available to investors regardless of their socioeconomic status.
Education as the Cornerstone of Retail Options Access
Robinhood, one of the pioneers in commission-free trading, has long positioned itself as an advocate for retail investor access. A company spokesperson emphasized the firm’s belief that “options should be available to investors of all socioeconomic backgrounds—not just the wealthy and connected,” adding that the platform provides robust educational resources and approval requirements before users can access options trading.
“We’ve seen a significant number of retail investors on Robinhood improve their financial outlook by trading options,” the spokesperson told Traders Magazine. “We believe that offering educational resources is critical to advancing our mission.”
Robinhood’s “Options Trading Essentials” hub on its Robinhood Learn platform, coupled with an expanded Help Center and YouTube series, aim to support new investors as they navigate the complexities of options strategies. Access to trading is tiered and granted based on an investor’s self-reported experience and risk tolerance.
Julie Bauer, Chief External Relations Officer at the Options Clearing Corporation (OCC), which oversees the Options Industry Council (OIC), sees informed decision-making as foundational to investor protection. “Our Investor Education team provides a variety of content to meet investors where they are,” she said. “We offer long-, medium- and short-form content that fits the investor’s skill level and time commitment.”
Bauer also noted OCC’s longstanding role in producing the Characteristics and Risks of Standardized Options (ODD), required reading for all options traders. “We’ve created shorter companion content for the ODD to help investors navigate it and put its guidelines into practice,” she explained, reflecting the organization’s effort to lower comprehension barriers without restricting access.
At moomoo, a tiered access model forms the foundation of its approach. New traders begin with single-leg options only, while more complex strategies—like spreads or naked options—require demonstrated experience. “This approach can help ensure that investors build confidence and competence gradually,” said Neil McDonald, CEO of moomoo US. “We continually seek new ways to understand the investors using our platform.”
In addition to risk warnings and paper trading, moomoo offers a sophisticated options strategy builder that allows investors to simulate trades, run scenario analyses, and back-test strategies. “By combining tiered access, robust education, and cutting-edge tools, retail traders can grow at their own pace while staying protected,” McDonald added.
Anthony Denier, Group President and US CEO at Webull, echoed similar views. The firm has developed strict eligibility standards based on investor knowledge and experience, leading to a high rejection rate for advanced strategies. “Roughly 6 out of every 7 applications for naked options trading are denied,” Denier said. “Webull’s eligibility requirements are among the most comprehensive.”
Webull also provides paper trading, extensive educational resources, and works closely with partners like Cboe and the OCC to expand its content. “We believe our business succeeds when our users succeed,” Denier said. “We want our customers to stay here and grow with us, not lose their money and go home.”
Risk, Responsibility, and the Limits of Regulation
Even with substantial educational offerings, not all outcomes are positive. MIT Sloan School of Management’s Professor Eric So has studied the behavior of retail options traders and found troubling patterns.
“Our study found that retail investors do face substantial losses—averaging 5-9% per trade, with losses reaching 10-14% for the most volatile events,” Prof. So explained. However, he warned against overly paternalistic policies. “While our research clearly shows the average retail investor loses money trading options, we need to be careful about treating adults as if they can’t make their own financial decisions.”
Rather than sweeping restrictions, Prof. So advocates for targeted interventions: “The key insight from our research is that retail losses stem from overpaying for volatility, incurring high transaction costs, and holding positions too long.” He supports lightweight, app-level disclosures—like intuitive probability odds before placing a trade—that promote informed choice without imposing access barriers.
The Security Traders Association (STA), which represents institutional and retail broker-dealers, also calls for a shift in how investor capability is measured. “Accredited Investor Standards apply a wealth test,” said Jim Toes, STA President and CEO. “It is a controversial rule because it treats investors differently based on financial status rather than understanding and interest.”
Toes emphasized the importance of continuous education in today’s investing environment, where access to markets is easier than ever. “New investors require guidance to understand the implications of any investment,” he told Traders Magazine. “The need for more inclusive definitions that acknowledge knowledge and experience as valuable metrics for investor status is growing.”
Denier of Webull also weighed in on the tension between platform incentives and user safety. “We take our obligations under FINRA Rule 2220 very seriously,” he said, referring to the regulation on options communications. “We will not approve for publication any marketing material that is misleading, one-sided, or portrays options trading like a game.”
Transparency, he noted, is more than a compliance issue—it’s core to customer retention. “At the surface level, it may seem that more transactions equal more profit, but we believe that long-term customer growth and education is a more sustainable business model.”
McDonald of moomoo concurred. “Transparency is non-negotiable,” he said. “We spend a lot of time and effort to prioritize education and increase risk awareness at every step.”
As digital platforms continue to lower the barrier to entry in financial markets, the conversation around investor safety and education is evolving. For now, the focus is shifting from whether retail investors should trade options to ensuring they understand how to do so wisely. As Prof. So aptly put it: “Let’s make sure people understand the odds—but ultimately, respect their autonomy to decide how to use their own money.”
